What's a Fraud Alert?
Fraud Alerts were created by the Fair Credit Reporting Act (FCRA) that was passed on December 4, 2003. It went into effect on 1/1/04.
The FCRA established the right for any consumer to to request a fraud alert for 90 days at a time. It requires one call to one of the credit bureaus, Equifax, Experian or TransUnion. Whichever one you call is required to notify the other two about your fraud alert request.
Any new creditor has a duty to honor your fraud alert. This means any business wanting to give you a loan or line of credit (like a credit card or home equity loan) needs to call you and ask for your authorization in person. They are to call you at the number you provided when you placed the fraud alert.
The concept of a fraud alert is to stop an identity thief in his tracks from opening a new line of credit with your information.
The alert expires after 90 days and needs to be renewed if you want your protection to continue. The exceptions to the 90 day rule are active military personnel or identity theft victims. An active duty alert will last for 12 months. An identity theft victim can place a fraud alert that will last for 7 years provided they have filed the required affidavits with the FTC.
Will a fraud alert make it hard for me to get new credit?
No, it won't make it hard to get credit. It will just slow down the approval until you're contacted in person. The main type of credit you won't be able to get is the 'instant' credit approval. You've heard the offers many times at stores. They sound like this, "If you apply for our Visa card today, you'll save 10% on your purchase."
Identity thieves LOVE instant credit. It's one of their main ways to rip you off, well, instantly before you even realize you're a victim.
Fraud alerts are free and easily done by phone or online. You do need to remember to renew them every 3 months. You won't find the credit bureaus advertising them or reminding you to renew because they can't turn a profit with them. They would rather sell you credit monitoring which only alerts you AFTER someone opened an account in your name.
Fraud alerts aren't a perfect solution to identity theft because they don't require a new creditor to call you – only request that they comply with the law. However, they're the best solution we've been given so far.
