Identity Theft, Identity Theft Protection, ID Theft
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Fraud alert and credit freeze for identity theft prevention

By Amanda Randell
Published: Friday, November 20th, 2009

Identity theft is a serious crime where a person fraudulently uses someone’s personal information mostly for his financial advantages. The outcome is a tremendous loss for the victim in that his credit increases without any purchase gained. In order to prevent your credit from being scammed, awareness of identity theft prevention is necessary. Some measures done in preventing identity theft especially concerning credit accounts are fraud alert and credit freeze. 

Fraud alert is a measure undertaken by credit owners to safeguard their credit accounts. When a credit owner opens an account, the lender or the credit bureau calls the owner by phone in order to validate that he is really the one opening the account. It serves as an alarm to the owner that someone is trying to open an account under his name. The alert can be viable for up to 90 days or up to 7 years depending on what the owner applies for. Another advantage of fraud alert is that it’s free, even when it is removed. 

Credit freeze on the other hand is a more effective form of identity theft prevention. This bars lenders or creditors from seeing an owner’s credit report unless they are given access by the owner himself. It eventually prevents identity thieves from gaining credit although credit owners must unfreeze their reports in order to avail of credit for themselves. Freezing may cost $10 and another $10 dollars if the owner wishes to unfreeze it. Credit freeze may last until it is requested to be removed. 

Though these measures can ensure identity theft prevention, certain downsides should be taken in account. 

Fraud alerts:

  • Fraud alerts are very effective if the creditors take time to read them. Some creditors are alleged to grant credit without reading a person’s full credit report.
  • Creditors are not obliged by law to call the owner when new accounts are being opened so that even with fraud alerts in place, some identity thieves can still gain access to the owner’s credit.
  • Fraud alerts can also affect the owner’s ability to obtain instant credit, gain employment or even rent an apartment. 

Credit freeze:

  • Credit freeze on the other hand may cause delays in applying for new loans, insurances, utilities, mortgages, government services, rental housing and licenses to name a few.
  • The cost in freezing and unfreezing may also be a downside although minimal compared to the identity theft prevention or security that it serves.
  • Another limitation of credit freeze that it is no longer applicable to accounts that have been compromised. In the event that your credit card has been stolen, freezing it won’t do any good.
  • Credit freeze is not available in all states. 

With the knowledge of identity theft prevention measures, we can all combat this serious threat to our identity and to our lifestyle. Still, vigilance is the key to prevention. Make other people aware about keeping personal information secure.

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