Fraud Alert vs Credit Freeze: What's the Difference?

Adding a layer of protection to your credit report is a smart way to help prevent identity theft. Two tools that can help protect your credit are fraud alerts and credit freezes. While both can help guard against identity theft, they work differently and serve different purposes. 

So, how do they work? Which one could better fit your needs? Below is a breakdown of the differences so you can compare a fraud alert vs. credit freeze and make the best decision on how to protect your data identity.

What is a fraud alert on credit file?

A fraud alert is a statement added to your credit file stating that you may be, or potentially have been, a victim of identity theft.

It doesn’t prevent lenders from viewing your credit report. Instead, when lenders see a fraud alert on your credit report, they need to take extra steps to verify your identity before approving new credit. A fraud alert can add an additional layer of protection without limiting access to your credit report.

How a fraud alert works

When a fraud alert is added to your credit file:

• An alert is placed on your credit report

• It signals that you may have been a victim of identity theft

• Lenders are notified to verify your identity before approving new credit

• Access to your credit report is not fully restricted

Because lenders can still access your report, applying for credit may be more convenient than if your credit file is frozen.

Types of fraud alerts

There are multiple types of fraud alerts available:

Initial Fraud Alert (1 year) 
An initial fraud alert lasts for one year and is designed for consumers who suspect they may be at risk of identity theft.

Extended Fraud Alert (7 years) 
An extended fraud alert lasts for seven years and is available to identity theft victims who provide appropriate documentation, which can include a report from your local police department or other law enforcement agency or a report from the U.S. Postal Inspection Service.  

Active Duty Military Alert (1 year) 
Active duty military personnel can place an active duty alert on their credit reports to help reduce the risk of fraud while deployed.

When you should consider a fraud alert

A fraud alert may make sense if:

• You suspect identity theft

• Your personal information has been exposed

• You notice early warning signs of fraud, such as unfamiliar inquiries or suspicious account activity

What is a credit freeze?

A credit freeze, sometimes called a security freeze, will block all third parties, such as lenders or other companies, whose use is not exempt under law, from accessing your credit file

A credit freeze can help prevent fraudsters from opening an account in your name. At the same time, it will still block lenders from accessing your credit report even if it’s you applying for credit. So you’ll need to remember to unfreeze your credit before applying.

How a credit freeze works

When you freeze your credit report:

• Access to your credit report is restricted

• Fraudsters may have a harder time opening new accounts in your name

• Your credit report will remain frozen until you request its removal

Because lenders generally need access to your credit report before extending credit, a freeze can be an effective deterrent against criminals attempting to open up a credit account in your name.

How long does a credit freeze last?

Unlike fraud alerts, credit freezes do not expire automatically:

• A credit freeze remains in place until you remove it

• You can temporarily lift a freeze if you need to apply for credit

Temporary lifts can be useful when applying for a mortgage, auto loan, credit card or other financing that requires a credit check.

When a credit freeze makes sense

A credit freeze may be appropriate if:

• You're not actively seeking new credit

• You've experienced confirmed identity theft

• Your information was exposed in a data breach

• You want an additional, strong layer of protection in addition to a fraud alert

Can you have both a fraud alert and a credit freeze?

You can use both a fraud alert and a credit freeze at the same time. Using both a fraud alert and credit freeze can offer:

• A layered protection strategy

• Enhanced defense against identity theft

• Additional protection if you forget to renew a fraud alert

However, using both may require increased management. For example, you'll need to remember to renew an expiring fraud alert and temporarily lift your credit freeze whenever you're applying for new credit.

How to place a fraud alert on your credit report

Placing a fraud alert with TransUnion is a straightforward process:

1. You can add a fraud alert online by logging into the TransUnion Service Center.
2. You'll need to create a free account if you don't already have one.
3. You will be asked to add a phone number to associated with your fraud alert when you initially add a fraud alert
4. It's important to keep your phone number current because lenders may call that number when verifying a credit application.
5. When you place a fraud alert with TransUnion, Equifax and Experian are automatically notified so they can add a fraud alert to the credit reports they maintain for you.

How to freeze your credit

You can also manage a credit freeze by logging into the TransUnion Service Center. If you don’t have an account, you will need to create one.

1. Place, remove or temporarily lift a freeze online.
2. A temporary lift can be useful if you're planning to apply for credit and know when a lender will need access to your report.
3. When temporarily lifting a freeze, you can choose the date the freeze is automatically reinstated.
4. A credit freeze remains on your TransUnion credit report until you remove it.
5. To add or manage your credit freeze with Equifax and Experian, you'll need to contact those credit reporting agencies individually.

Which option is right for you?

If you want more control over who can access your personal information, you may want to freeze your credit. But if you don’t want to block access to your credit report, though still want to add an extra security measure, a fraud alert may be right for you. You can also opt to place both a fraud alert and a credit freeze for added protection.

Continued credit monitoring is still important

A fraud alert and credit freeze can help defend you against identity theft, but no tool is impenetrable. Regularly monitoring your credit is another way to help you identify any potentially fraudulent activity. To learn additional ways to safeguard your important data, read our blog post on how to protect yourself from identity theft.

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