Fraud Alert vs. Credit Freeze: What’s the Difference?

What is a fraud alert?

A fraud alert ensures that lenders verify your identity before allowing new credit to be opened in your name. It does not block companies from viewing your credit report, but it does help prevent fraudulent accounts from being opened in your name.

“It doesn’t block credit from being opened and relies on creditors to follow the warning,” said Paige Hanson, co-founder of SecureLabs and a certified identity theft risk management specialist.

To initiate a fraud alert, you must contact one of the major credit bureaus: Experian, Equifax or TransUnion. Anyone can place a fraud alert on their credit, but they’re most beneficial for people who have experienced identity fraud and active-duty servicemembers.

» NEXT: How to place a fraud alert on your credit

Types of fraud alerts

There are three types of fraud alerts: initial, extended and active duty.

Initial fraud alert

An initial fraud alert notifies creditors to confirm any new credit before opening a new account in your name. It can be placed by anyone concerned about identity theft and lasts one year, but it is renewable. You will receive a free credit report after registering your alert.

Extended fraud alert

An extended fraud alert works exactly like an initial fraud alert in that it prevents new lines of credit without identity verification first. You have to submit a police or FTC report related to your identity theft, but it lasts for seven years, and it is renewable.

An extended fraud alert also requires your removal from any marketing lists with credit bureaus for unsolicited credit and insurance offers. This lasts five years unless you request otherwise.

Active-duty fraud alert

Active-duty servicemembers can place an active-duty fraud alert on their credit. It works just like an initial fraud alert, preventing anyone from opening new credit without confirming with you first.

What is a credit freeze?

A credit freeze is designed to prevent identity theft by refusing any new accounts. Unlike a fraud alert, it skips the notification and instead automatically denies any new credit opened in your name. It also makes your credit report private, so lenders cannot check your credit and thus cannot issue credit in your name.

You can place or lift the credit freeze at any time. You can also temporarily lift the freeze in order to apply for a new credit card or rent a new home.

To do this, you must contact each of the credit reporting bureaus — Experian, Equifax and TransUnion. There is no cost to place or lift a credit freeze, and it does not affect your credit score.

While this makes it harder for scammers to open new credit in your name, government agencies and existing creditors and debt collectors may still be able to access your credit. Additionally, your credit freeze does not affect any existing credit accounts or any credit monitoring services.

“A credit freeze is more powerful but also more complicated,” explained April Lewis-Parks, director of education and communications at Consolidated Credit. “For instance, it doesn’t stop your current lenders from seeing your report — or debt collectors. It simply stops new people.”

She added another loophole: “If credit card issuers have prescreened you for offers, they can still look at your reports.”

Anyone can freeze their credit for any reason, regardless of whether they have been a victim of identity theft. It is generally a good idea if your personal information has been involved in a data breach or if you have experienced identity theft in the past.

“While nothing is foolproof, a credit freeze is the closest you can get,” says Lewis-Parks.

» MORE: How to freeze your credit

Should you use a fraud alert or a credit freeze?

When deciding whether to use a fraud alert or a credit freeze, there are some times when one may work better than the other.

Here’s an overview of how these protections differ in duration and placing one.

A fraud alert may work better for you if you:

• Are, have been or suspect you are the victim of credit fraud or identity theft
• Are an active-duty service member
• Were involved in a data breach
• Have had your wallet or personal documents stolen or lost

A credit freeze may work better if you:

• Do not plan to apply for credit in the near future
• Need greater protection from new account fraud
• Want to protect the identity of minor children and dependents

“Fraud alerts offer flexibility but limited protection,” said Hanson of SecureLabs. “If your personal information has been exposed in a breach or you want more protection, a credit freeze is generally the better choice between the two.”

“I keep all three of my credit reports frozen at all times,” said Jay Zigmont, founder of Childfree Trust. “Whenever I need to open a new account, I ‘thaw’ or pause the credit freeze.”

“There is no reason not to freeze your credit. It is a free way to build a wall around your credit in case of identity theft,” Zigmont said.

However, it is important to remember that the two are not mutually exclusive; you can easily use both to protect your credit.

“It is also important to note that fraud alerts and credit freezes only protect your credit file. They do not monitor for broader identity misuse,” warned Hanson.

“If your information has been compromised, enrolling in a reputable identity theft protection service is strongly recommended,” she continued. “My experience in this field finds that detecting and resolving identity theft on your own is extremely difficult, and professional monitoring and recovery support can make a significant difference.

To help, consider an identity theft protection service, such as Identity Guard, IdentityForce and LifeLock. A credit monitoring service can also help, such as PrivacyGuard, Credit Sesame and IDShield.