What is the difference between a Fraud Alert and a Credit Freeze?

Identify the steps you can take to protect yourself from identity theft.

No one ever wants to become a victim of identity theft. However, based on Bureau of Justice Statistics, an estimated 17.6 million Americans (aged 16 and older) were victims of Identity Theft. From that sample, the majority of respondents, (86%) experienced misuse of a credit account or bank account and about 4% had their personal information stolen, which was unfortunately used in fraudulent activity.

How can you protect yourself from an identity thief? You can place a Fraud Alert or you can elect to place a Credit Freeze on your credit report. What’s the difference? A Fraud Alert can make it harder for a thief to open more accounts in your name because a business must verify your identity before it issues credit, so they may try and contact you. Fraud Alerts are free, stay active for 90 days and can be renewed once they expire. You are also entitled to one free copy of your credit report from each bureau. Visit the Federal Trade Commission for steps to place a Fraud Alert. Consumers also have the option to place an Extended Fraud Alert, which lasts 7 years. 

A Credit Freeze, also known as a security freeze, restricts access to your credit report. This makes it more difficult for thieves to open new accounts in your name because most creditors need to see your report before approving a new account.  If potential creditors cannot see your credit report, they may not extend new credit.   A Credit Freeze does not affect your credit score or prohibit you from obtaining your credit reports. In addition, it doesn’t prevent a thief from making charges to existing accounts, so it is important to still monitor all of your current accounts. The fee to place and remove a Credit Freeze, and the duration of the freeze all depend upon state law (learn more at naag.org).  Having a police report may help you waive the fees to place and remove a Credit Freeze. Visit the Federal Trade Commission for steps on how to place a Credit Freeze.

For additional money management resources visit Michigan State University ExtensionMichigan State University Extension offers financial literacy and homeownership workshops throughout the year to help you become financially healthy. For more information about classes in your area, please visit either the MSU Extension events page or MI Money Health website. Additionally, you can take the Financial Health Survey at MI Money Health to access if you’re financially healthy and discover more ways you can improve your financial health. 

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