Reading time 4 minutes Updated: February 16, 2024
Originally published: June 14, 2021.
Is it worth placing a fraud alert on your credit report? Why? Doing so can prevent or reduce future fraud incidents and protect your credit health.
With identity theft and credit card fraud on the rise, placing a fraud alert on your credit report is considered good practice to protect yourself from bad actors.
It’s easy to place a fraud alert on your credit report.
Unless you cancel it sooner, a temporary fraud alert will last for one year and require lenders to verify your identity before processing a credit card application.
Did you know that as an added security measure and to prevent fraud, American ExpressⓇ reports reference numbers — not your actual account number — to credit bureaus?
Credit card fraud is one of the most common forms of identity theft, according to the Federal Trade Commission (FTC) . Credit card fraud has been the most common consumer complaint in 16 of the 20 quarters since its introduction in 2019. More broadly, more people are taking steps to protect themselves from fraud. Setting a fraud alert on your credit report is an important and relatively simple step you can take to make it more difficult for fraudsters to open credit card accounts in your name.
You can place a credit bureau fraud alert by checking with one of the three major credit reporting agencies – checking with one credit bureau will cause the other two to place an alert on your report .
According to the credit reporting agency Experian, “A fraud alert is a free notice you can add to your credit report that instructs anyone who receives a credit application in your name to verify your identity before processing the application.” 3 Unless you ask to end the alert early, it will remain on your credit report for one year.2 After the one – year period is up, you can request another alert.2
Placing a fraud alert means businesses such as credit card issuers, potential employers, landlords, insurance companies and car rental companies will need to contact you to verify your identity before issuing a loan.
How do fraud alerts work?
A fraud alert requires lenders to take extra steps to verify your identity before extending credit . 2 When a fraud alert is placed on your credit report, creditors who access your report will be notified of the alert. They will then attempt to verify your identity by contacting you (for example, using the phone number you provided) before completing your loan application . 4 This scammer makes it difficult to open new accounts or rename existing accounts. Standard fraud alerts are free and are valid for one year . 2
It’s a good idea to request a fraud alert if someone else is using your personal data. Likewise, alerts are useful if you’ve recently lost your wallet, had your personal account or financial information stolen, or received notification of a data breach at a company that holds your account information.
What is Extended Fraud Alert?
An extended fraud alert is valid for seven years . 2 Only people who have experienced identity theft can request an extended fraud alert . 2 To get an extended fraud alert, you must have a police report or FTC identity theft report to support the request . 2 An extended fraud alert can also be renewed, but you will need to provide one of these documents each time to prove eligibility . 5
Military Personnel and Fraud Alerts
Active duty military personnel have the option to apply for an Active Duty Fraud Alert if they are deployed.2 Such fraud alerts are valid for one year and can be renewed as needed during the military member’s deployment.2 Military personnel who have already been deployed can add an Active Duty Alert on their behalf if they have a personal representative with power of attorney.6 You can update or delete an alert by phone or mail and get help from the Consumer Financial Protection Bureau or your state attorney general’s office.6
Do fraud alerts affect getting credit?
Requesting a fraud alert will not affect your borrowing power, credit score, or the details on your credit report.7 In some cases, it may delay your application, for example, if you are applying for a new credit card.7 Why? The extra step of triggering a fraud alert may require additional time to verify your identity to complete the application process.7
People who are concerned about personal data and identity being compromised (a legitimate concern given the rise in identity theft and fraud) may wish to set up a fraud alert. This alert can be deleted or updated at any time . 2,8 Setting up a fraud alert is a proactive step you can take if you suspect or know that your personal information has been stolen or compromised.
Toby Elkin has been covering technology and marketing trends for over 20 years as a writer, editor, consultant, and content marketer for media brands, startups, and large companies.
All CreditIntel content is written by freelance writers and commissioned and paid for by American Express.
