Fraud Alert vs. Credit Freeze

Credit Report Information

The credit reporting companies – TransUnion, Equifax and Experian – are the three major companies that maintain credit reports. The credit reporting companies issue credit reports to creditors, insurers and others as permitted under law.

Here’s an Example of How the System Works:

  1. Apply for a Credit Card

When you apply for a new credit card, the creditor requests a copy of your financial history, or credit report, from one or more of the credit reporting companies.

  1. The Creditor’s Assessment

The creditor may use your credit report, a score, and other information you provide (such as income or debt information) to determine whether to approve your application and what rates to offer.

  1. The Creditor’s Decision

If you are issued a card, the creditor reports that account to the credit reporting companies, and then updates it, including your balance and payment activity, about every 30 days.

  1. Your Credit Profile Updated

The credit reporting companies update your credit report as they receive new information from creditors and lenders. Your credit profile changes based on your financial activity. The next time you apply for a credit card or loan, the process repeats.

Your credit report

Your report is divided into six main sections:

  1. Identifying Information (name, address, birth date and Social Security number)
  2. Employment
  3. Consumer Statement
  4. Account Information
  5. Public Records
  6. Inquiries

Credit Report

Negative Records

Late payments create a negative record. Generally, negative records will stay on your report for up to 7 years (up to 10 years for certain bankruptcy information). Positive records can remain on your credit report longer

Your Credit Report is updated every 30 days

Your credit report is updated with new information from your creditors approximately every 30 days, to reflect your account balances and payments you make.

Check every 6-12 months

Not all creditors report to all three companies; the companies obtain their data independently, so your credit reports from TransUnion, Equifax and Experian could substantially differ. That’s why it’s important to check your three credit reports every 6-12 months to ensure that the information is accurate and up-to-date.

Correcting inaccuracies

Under the Fair Credit Reporting Act, consumers are protected if there is inaccurate information on their credit reports. If you find inaccurate information on your credit reports, you can contact the associated creditor or lender directly. You can also dispute the inaccuracy with the credit reporting companies.

Know the system

Managing your credit and maintaining a good credit history can lead to better rates on major purchases. We recommend that you check your credit reports every 6-12 months, or at least 3 months before a major purchase, in order to identify potential inaccuracies and any signs of identity theft.

Routine check-ups, along with paying your bills on time, keeping your credit card balances below 35% of their limits, and correcting any inaccuracies will help ensure your credit reports are viewed in the most favorable light.Dan roaring tigerFraud Alert

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A Fraud Alert is a cautionary flag, which is placed on your credit file to notify lenders and others that they should take special precautions to ensure your identity before extending credit. When you place a Fraud Alert, you can provide a mobile or other phone number for lenders to contact you to verify that the party applying for credit is actually you, not a fraudster.

When you place a Fraud Alert on your credit report with any one of the three major credit reporting companies, that company will notify the other two and fraud alerts will also be placed on those files, too. An Initial Fraud alert lasts for 90 days and may be renewed. Fraud Alerts are available at no charge to consumers who believe they may be victims.

Security Freeze (also known as Credit Freeze)

A Security Freeze is a more dramatic step to protect your credit. Placing a Security Freeze will prevent lenders and others from accessing your credit report entirely, which will prevent them from extending credit. With a Security Freeze in place, even you will need to take special steps when you wish to apply for any type of credit.

Because of more stringent security features, you will need to place a Security Freeze separately with each of the three major credit reporting companies if you want the freeze on all of your credit files. A Security Freeze remains on your credit file until you remove it or choose to lift it temporarily when applying for credit or credit-dependent services.