A fraud alert essentially requires consumer reporting agencies to place a notification indicating potential fraud on the request of the consumer. The provision also allows the consumer to request an extended fraud alert where the consumer’s credit score shows the notification for a period of seven years.
Fraud Alerts and Credit History
Fraud alerts can prove very useful in establishing and maintaining a good credit history. It will prevent any misuse of your credit score and history in opening new lines of credit. By calling one of the bureaus you can setup a fraud alert at any time. After the initial intimation, any lender and creditor is obliged to call your listed number and confirm your identity before accepting any request.
Fraud Alert Validity
The initial fraud alert is valid only for 90 days and is useful immediately after you suspect any wrong doing pertaining to your identity. After the fraud alert has been activated the bureau is supposed to provide you a free copy of your credit report. Once received, it is the duty of the consumer to check and verify that all details are accurate and that there has been no misuse of your identity. In cases where there is a discrepancy, you should follow the following steps.
Inform the Police
The first thing you need to do in this case is to inform the police that you have been a victim of identity theft. The police will file a Identity theft report or in some cases a Miscellaneous incident report. You will need to include your valid ID and proof of residence in the police report.
Inform the Federal Trade Commission
Once the police has been informed, you should proceed to inform the FTC regarding the theft. The Federal Trade Commission will refer the victim’s complaints to other agencies which can further investigate the incidents.
Place an Extended Fraud Alert
An extended fraud alert is submitted to the credit bureaus with valid proofs of identity and residence. It lasts for up to 7 years and is a reference in your credit files that specifically mentions that you have been a victim of identity theft. This also means that any credit application will be checked thoroughly. An extended fraud alert will also entitle you to receive two additional free credit reports from the three nationwide credit bureaus. In addition your name will be removed from any marketing lists for five years unless advised by the consumer.
Close all the Affected Accounts and Lines
Examine the documents carefully and check for any unauthorized usage. Contact each creditor separately informing them of the theft. Credit card companies and banks need to be informed in writing along with the document reports to authorities.
When Opening a New Accounts
Use due care when opening any new accounts, making sure not to repeat any old PINs or passwords that can help the thieves. In case there have been fraudulent transactions, contact the company’s dispute department. In case of fraudulent accounts either you should file a report with the company or with the police. Once the police has been informed the company will be obliged to remove the wrong information. (See also: 10 Identity Theft Prevention Tips)
Once the case has been resolved you should ask for a letter in writing stating that the incident was a misgiving and the disputed accounts and charges are voided. The letter is very important in case the charges and accounts appear again in your credit reports.
Credit Alerts Prevents from Opening New Accounts
It is also important to note that a fraud alert only prevents an identity thieve from opening new accounts in your name. Any existing credit cards or bank accounts which are being misused will have to be closed and properly investigated. It will also offer no protection against services that do not require credit checks; it is valid only in the case of new lines of credit.
Another option to fraud alerts is a credit freeze. A credit freeze will not allow any potential creditors to have access to your credit files, unless specifically authorized by you. Once again this is useful only in the case of new lines of credit.
Use it Timely
The timely use of fraud alerts and credit freeze can help in hampering identity theft and protection of existing credit cards and checking accounts. It is still advisable to follow the basics of financial security (i.e., strong passwords, secure PINS, and protected access to financial documents).