A Fraud Alert or a Credit Freeze?

Q. What's the difference between a fraud alert and a credit freeze?

A. A fraud alert is a good first step if you lose your wallet or otherwise worry that you could be the victim of identity theft. It's the easier proactive measure, but not as secure as a credit freeze.

See also: Online safety and your money.

To create a fraud alert, you simply notify any one of the big three credit-reporting bureaus — Experian, Equifax or TransUnion — and it will notify the others. There's no charge.

A fraud alert means that a cautionary note goes into your credit report, and lenders or service providers are supposed to take extra precautions before granting credit in your name, such as contacting you to verify that it was you who made an application.

But they are not legally required to do so, and therefore fraud alerts are not foolproof to thwart identity theft.

A fraud alert initially lasts for 90 days but can be renewed indefinitely. You can also get an extended fraud alert, which stays in your credit report for seven years, if you can provide a police report or other official record showing that you've been the victim of identity theft.

With more effort you can get the stronger protection of a credit freeze (also known as a security freeze). This measure is especially advised for previous victims of identity theft, who are likely to be targeted again. Details of a credit freeze are set by the laws of each state; some allow freezes as a preventive measure if you haven't previously been victimized.

With a freeze, access to your credit history is essentially off limits. This thwarts identity thieves from getting credit in your name because legitimate lenders will not extend credit without first reviewing your credit history.

But having a freeze can complicate things when you want your credit file to be checkable. To get utility service, a cellphone plan, an insurance policy or even a job, a company may require a look at your credit record. In those situations, you must unfreeze your file temporarily by providing the credit bureau with a PIN or other access code by phone or online.

Depending on your state's law, each freeze and thaw can cost between $5 and $20, although fees are sometimes waived if you're older or you provide proof — a police report, for example — that you've already been a victim of identity theft.

To enact a credit freeze, you must apply separately to each of the credit-reporting bureaus. For instructions, visit the websites of Experian, Equifax and TransUnion.

Sid Kirchheimer writes about consumer and health issues. Have a question for Sid Kirchheimer about a new product, a new kind of bank account? Check out the Ask Sid archive. If you don’t find your answer there, send a query.