Credit Cards

Is Your Best Response to Equifax a Credit Freeze or a Fraud Alert?

As the fallout from the huge Equifax data breach continues, consumers can choose among two safeguards to thwart fraudsters from opening unauthorized accounts in their name: a simple, and free, fraud alert; or the more drastic—and more costly and inconvenient—step of freezing a credit report.

Both steps involve contacting at least one of the three national credit bureaus—Equifax, Experian, and Transunion. Figuring out which measure is right for you comes down to what you prioritize the most: cost, convenience or efficacy.

Fraud Alert

An initial fraud alert signals to lenders that you’re concerned about the safety of your personal data, and that they should go beyond their normal procedures to verify your identity and to be sure that your application for credit is legit. If you leave a telephone number when placing an alert, a lender may use that to contact you for verification.

Pros: A fraud alert is not only free of charge but easy to implement. You need to contact just one of the bureaus to place an alert on all three of your credit reports. The bureau will contact the remaining two on your behalf.

Cons: The alert only lasts 90 days. Your risk of identity theft could easily outlast that period—even a lifetime—so you will need to remember to renew your alert each time it expires. A fraud alert may also delay the approval of credit applications you make, as lenders verify your identity. You probably won’t be able to get instant approvals—such as store credit cards at the point of purchase—with an alert in place.

Who should get one: Given the breadth of the breach and the value of the stolen data, everyone should, at the very least, place a fraud alert on their reports as a precaution. Remember: The names, addresses, birthdates, and Social Security numbers of 143 million Americans—more than half the U.S. adult population—were exposed in the Equifax breach, and that data is enough for criminals to establish new credit in your name.

How to do it: Contact one of the credit bureau’s fraud alert centers below to add an alert. Here are direct links:

To verify your identity, the bureau will ask questions related to your credit history, residency and other personal information found on your credit report.

Credit Freeze

A credit freeze prevents new lenders from pulling your credit report, essentially making it impossible for some nefarious person to open a fraudulent credit account in your name. A freeze doesn’t prevent lenders you already have a relationship with from pulling your credit report for account reviews, collections or fraud prevention.

Pros: This is more effective than even a fraud alert in preventing unauthorized accounts. That’s because a freeze locks down your credit report, so lenders can’t even start the approval process for a new credit application. That extra protection provides additional peace of mind.

Cons: A freeze must be requested separately at all three bureaus, versus a fraud alert, which requires contacting only one bureau. If you need to apply for credit, you will need to unfreeze your credit report first—again by contacting the three bureaus individually. There is typically a fee both to freeze and unfreeze a credit report. States cap how much credit bureaus can charge for this service, but the fees range from free to $11 per transaction at each bureau. (Equifax is waiving its own fees to freeze and unfreeze reports in the wake of the hack.)

All states forgo fees for victims of identity theft who have a police report, while others waive fees for seniors 65 and over, children under 16 and incapacitated persons represented by someone else. But most people affected by the Equifax breach don’t qualify for a waiver, but still must practice lifelong vigilance. That means freezing and unfreezing your reports—and paying the subsequent fees—whenever you need new credit over many years.

A frozen credit report, then, will increase the hassle of getting any or all of the following:

  • Auto loan
  • Credit card
  • Mortgage
  • Student loan
  • Personal loan
  • Insurance
  • Government services or payments
  • Rental housing
  • Employment
  • Investment
  • License
  • Cellphone
  • Utilities

Who should get one: This is a good option for older people who have established financial lives and don't expect to open a credit card or other loan in the near future. People who infrequently open new credit, and so will less often need to unfreeze the report, or those who want maximum peace of mind may also want to consider a freeze.

How to do it: Visit each credit bureau’s security freeze center online to place a freeze. Here are direct links:

As with placing a fraud alert, the bureau will ask several questions related to your credit report to verify your identity. The bureau will generate a personal identification number (PIN) that you should keep safe. This PIN is required to unfreeze a credit report, either temporarily or permanently.
Janna Herron

Janna is a Senior Writer at ValuePenguin covering banking, credit cards and credit scores. She has spent more than a decade writing and reporting on personal finance, real estate and business, and has received three journalism awards for her work.

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