What are the differences between active monitoring, a credit fraud alert, and a credit Freeze?
What action should you take if you are a victim of a data breach when it comes to your credit? There are essentially three courses of action:
Active Monitoring – You can monitor your own credit if you're vigilant enough. Signing up for Credit Karma and Credit Sesame and being sure to request your free credit reports annually will allow you to keep tabs on your existing accounts, as well as anything that occurs involving your credit. However, there are monitoring services you can purchase that may offer more protection. If you decide to go this route, be sure to carefully research your options and the services offered.
Credit Fraud Alert – Placing a credit fraud alert with the credit reporting agencies (“CRAs”) requires a creditor obtaining your credit report or score to take steps to verify your identity first, such as calling you. This not only applies to applications for new credit, but also to requests for an additional credit card or increasing your credit limits. It is free and if you request it from one of the CRAs, they must communicate it to the other two. There are three types:
- Initial Fraud Alert – works for 90 days and is renewable
- Extended Fraud Alert – works for seven years, but requires you to first file an identity theft report (This also removes you from marketing lists for prescreened credit offers for five years unless you ask them to put your name back on the list.)
- Active Duty Military Alert – applies to military members and lasts for one year
Credit Freeze – This is the strongest step you can take. It prevents creditors from accessing your credit reporting file or your credit score. It must be applied separately to each CRA. Important info:
- Creditors that rely on a credit report or score in granting credit will likely refuse to offer the same service because of the lack of information.
- It only protects against new accounts being opened, as it does not apply to actions on existing accounts, so you must still regularly review your credit reports.
- If you freeze your credit, you must undo the freeze (“thawing”) to allow anyone to access your credit or obtain your score when you need it to occur (applying for a mortgage, car loan, an apartment, a job, for insurance, etc.).
So which course of action do you take? It is a judgment call for each person based on their circumstances and needs. For instance, if you need to access your credit regularly, the credit freeze will be time-consuming and expensive. The fraud alert is a free easier step, but is initially only good for 90 days and must be renewed every 90 days unless you take the additional steps necessary for the extended fraud alert. It could be a good middle-of-the-road step. If you regularly monitor your accounts, you may want to just keep tabs on things.
Stay vigilant by regularly checking your credit reports. If you have any questions on the information provided or discover any incorrect information or fraudulent activity on your credit reports, contact us.