This was originally published on Monday, October 08, 2018, in the Pacific Daily News. Click here to subscribe to the PDN.
A credit freeze is considered one of the most effective ways to protect your credit and your personal identity. A few weeks ago, a new federal law went into effect that made placing a freeze or lifting a freeze on your credit report free of charge. The new law also extends short-term fraud alerts to one year. Before the new law was passed, short-term fraud alerts were only for 90 days.
There are differences between a fraud alert and a credit freeze. The credit freeze basically locks your credit. A fraud alert allows creditors to obtain your report, but they must take steps to verify your identity. Another difference is with a credit freeze you must contact all three credit reporting bureaus. With a fraud alert, you can contact one of the credit bureaus and then they are obligated by law to share your notice with the other two. The new law also makes applying for an alert free.
There are three types of fraud alerts:
Fraud Alert. If you are concerned about identity theft but you are not a victim, you can place a fraud alert. The alert will protect your credit for one year. After one year you may receive another full year also for free. If you lose your wallet or if your personal information has been compromised, you want to place a fraud alert on your credit. It will make it much more difficult for identity thieves to open accounts under your name.
Extended Fraud Alert. This alert is only available to those who have been a victim of identity theft. The alert lasts for seven years. If you need an extension you can request one. To receive the alert, you must have created an Identity Theft Report. With the extended fraud alert, you are eligible for two free credit reports a year from each of the credit bureaus. Your name will be taken off the marketing list that companies use to offer you pre-screened credit offers, for five years. You may request to have your name placed back on the list.
Active Duty Alert. Service members can use this alert to protect their credit while on deployment. The alert lasts for one year and can be renewed to match the length of their deployment. The service members name will be removed from the pre-screened credit offering marketing list for two years if they choose to do so.
You can remove the credit alert at any given time. Just like the credit freeze, placing a credit alert will not hurt your credit score. You can still apply for credit, unlike a credit freeze, but extra precaution will be taken to verify that you are the one opening the account. Good news is that you can have both a fraud alert and a credit freeze on your credit report. If you had a 90-day fraud alert on your credit report before the new federal law went into effect, your alert is good for the 90-days. Once the 90-days is over, you can then request for a year-long fraud alert.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.