Fraud Warning vs Credit Freeze: What’s the Difference?

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A fraud warning or credit freeze can both help prevent identity theft and fraud, but they are not the same.

A fraud alert simply requires creditors to verify their identity before opening a new credit. A credit freeze will cut off access to your credit reports unless you lift the freeze, making it unlikely that new credit accounts can be opened in your name without your permission.

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Fraud alerts and credit freezes are free. It’s easier to set up a credit fraud alert — you can do it with a single phone call — but a credit freeze offers better protection. Fraud alerts also expire automatically, while credit freezes until you cancel them.

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What is a fraud report?

A fraud alert is a warning posted on your credit statement that tells potential lenders to contact you — usually via a phone call — and verify your identity before issuing a new credit. If someone tries to get a new credit card or borrow money in your name, that contact should tip you so you can take action to stop the new account.

A fraud alert can be a good option for consumers who want to avoid having to freeze and thaw their credit when applying for credit.

There are three main types of credit fraud alerts:

  • Fraud alert: This basic type of alert is available to any consumer. It lasts for a year and is renewable. You don’t have to be a victim of fraud or identity theft to apply for one.

  • Comprehensive Fraud Warning: An extended fraud warning lasts seven years. It is only available to consumers who have been victims of identity theft and have reported either one or the police. Credit bureaus will also remove your name from credit and insurance offers marketing lists for five years unless you ask.

  • Active Fraud Alert: This warning for military personnel lasts for one year and can be extended for the duration of the deployment. In addition, the credit bureaus will remove your name from marketing lists for unsolicited credit and insurance offers for two years unless you ask them not to.

Nerdy Tip: Active-duty service personnel can receive free electronic credit monitoring, which can help identify problems that may be the result of identity theft. Register, contact each of the three credit bureaus.

Do I need a fraud report?

NerdWallet recommends fraud alerts for any consumer who doesn’t want a credit freeze or freeze. If your personal information has been exposed – and with the number of data breaches that have occurred, there’s a good chance it has — posting a fraud alert can let you know if someone is trying to use your information to open new accounts.

A fraud warning on your credit report only requires companies to take steps to ensure that it is really you applying for credit in your name. Some people choose to have both a fraud alert and a credit freeze, just in case one fails.

Post a fraud alert

You can set up a fraud alert with a single phone call or by going online. You only need one of the three credit bureaus — the person you contact is required to contact the other two.

These are the contact details you need:

Can I withdraw a fraud report?

You can withdraw a fraud report the same way you post it, by contacting one of the credit bureaus. Most fraud reports expire after a year.

NerdWallet recommends renewing them unless you want companies to accept credit applications in your name without verifying they’re legit. Removing fraud alerts can increase the risk of: identity theft because it makes it easier for someone to apply for credit in your name without your knowledge.

What is a credit freeze?

A credit freeze, also known as a security freeze, prevents lenders from accessing your credit report without authorization. Because credit card issuers and lenders usually want to see your credit history before approving a credit card or loan, they probably won’t extend new credit — to you or someone impersonating you — if they don’t have access to your credit report. The freeze will remain in place until you lift or “thaw” it with a password-protected credit bureau account or PIN.

When you want to open a new account, you can: unblock your credit and show lenders your credit report. This step may also be necessary if you are renting an apartment or applying for insurance, both of which usually require a credit check. As long as you have your password or PIN, your credit report can be lifted in minutes.

Note: The credit bureaus also offer an eponymous “credit lock” product, sometimes for a fee. It may be easier to lift a credit freeze than to lift a credit freeze, but the freeze can provide more legal protection.

Fraud Warning vs Credit Freeze – Which Should I Choose?

NerdWallet recommends a credit freeze for most consumers as it is the best protection available. Unlike a fraud alert, this one doesn’t expire, so you don’t have to remember to renew it. But you need to unblock your credit if you decide to apply for credit.

If you don’t want to freeze and release your credit every time you apply, a fraud alert is a good choice.

Will a credit freeze or fraud alert hurt my credit score?

A credit freeze only restricts who can view your credit reports. It will not affect your score and will not stop you from using credit.

A fraud report is simply an extra layer of security; it also doesn’t affect your credit score. It is easier to request credit if you have a fraud report, because you do not have to unblock your credit first.

Can I get a fraud alert and a credit freeze?

You can add a credit fraud warning on top of a credit freeze. Credit expert John Ulzheimer says it’s a bit like putting a safe in a vault, but he does it.

However, no freeze or fraud alert can detect or stop fraudulent charges on an existing credit card account. It’s up to you to check carefully for any charges that you haven’t authorized by viewing statements or setting account alerts to let you know when charges are made.

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