3 Types Of Fraud Alerts You Should Know

A fraud alert obligates potential creditors to verify the identity of anyone asking for credit in your name. Any fraud alert that is placed with one of the three main credit reporting agencies (Equifax, Experian, and TransUnion) will be forwarded and applied to the other two credit reporting agencies.

Fraud alerts are easily applied online, by phone, or by mail – but which type of fraud alert should you apply?

If you think your information may be exposed and you're vulnerable to fraud, but you haven't suffered any losses yet, apply an initial fraud alert as a pre-emptive measure. A recent amendment of the Fair Credit Reporting Act extended the initial fraud time period from ninety days to one year. You'll receive one free credit report from each of the agencies as part of your alert.

An active-duty alert is a form of initial fraud alert designed for active-duty military members. It has always lasted for one year and was created because of the added difficulty of detecting, documenting, and correcting fraudulent activity when soldiers are on active-duty. The recent change extends the same time courtesy to all Americans.

When you're a confirmed victim of fraud, you may apply an extended fraud alert that lasts for seven years. To confirm the losses, you'll need to file a police report with your local law enforcement agency or file an identity theft report with the Federal Trade Commission (FTC).

Once you have the confirming reports, download an extended fraud alert form from one of the agencies and return it along with photocopies of the confirming reports and documents confirming identity and address. The extended fraud alert application form will tell you which forms of identification are suitable.

With an extended fraud alert, you're entitled to two free credit reports from each of the three credit reporting agencies in the first year of the alert.

Your fraud alert choices are fairly straightforward. If you suspect your information has been compromised but you aren't a confirmed victim of identity theft, apply an initial fraud alert or an active-duty alert if you are an active military member. If you've fallen victim to identity theft, place an extended fraud alert – but remember to file the appropriate FTC form and police report.

You can renew an initial or active-duty fraud alert at the one-year mark or simply let the alert expire. Keep track of the effective date and set a reminder to renew at the end of the one-year period.

You can also remove your fraud alert at any time by contacting one of the credit reporting agencies, but why would you? It doesn't cause any harm to leave the protection in place.

Finally, note that neither a fraud alert nor a credit freeze stops criminals from abusing your existing accounts. Protect your existing account information by regularly reading over your credit report as well as changing passwords and logins to thwart thieves that may already have your information.

Credit cards can be an effective way to manage money, improve credit, earn points, and travel with perks if used the right way. Benzinga's personal finance staff provides tips on using credit cards effectively.

Related Links:

Credit Thaw Vs. Credit Unlock: What's The Difference?

Credit Freeze Vs. Credit Lock: What's The Difference?