Fraud Alerts Vs Credit Freeze Vs Credit Lock

Welcome back to the financial freedom show. My name is Rob Berger. And in today's video we're going to talk about an incredibly important topic, it's, how to protect your credit from identity theft. Now, if you watched the last video, you know, I kind of fell victim to this. My information, my identity was compromised. I don't know when there have been a number of data breaches that I'm sure you've heard about over the last number of years, so it could have been any one of them and someone used my.

Information in an attempt to get a loan from the small business administration. Now the good news is the loan was rejected. The bad news was that the SBA put a hard inquiry on my credit report at Experian. Now you can check out the previous video to learn exactly the steps. I took to get that hard inquiry off my credit report.

I was able to do it in less than a day so that's, good. But today we're going to talk about now. How do we actually take some affirmative steps to protect our credit rather than.

Waiting like I did uh for something bad to happen. How can we how can we kind of get on top of this ahead of time? So today, we're going to talk about three related concepts, fraud alerts credit freezes and credit locks they're similar, but they're, each different I'm going to talk about what each of them are how you can use them when you should use them how much they cost two of them are free by the way and so that's. The goal today. Now at the end of this video I'm going to show you how you can get. Access to my notes you're, looking at the some notes now it's a program I use called room research.

I will show you how you can get free access to these notes, where I'm starting to build out almost like a Wikipedia of information on personal finance and investing. If you don't want the notes, no problem, I will leave all the links to all the resources that we talk about in this video in the description below the video so let's get right to it. And I want to begin with fraud alerts. So. Remember we're talking fraud, alerts credit freezes and credit locks now with a fraud alert it's, pretty straightforward. You put an alert on your file that tells potential lenders, hey, this person's credit may have been compromised. And what you need to do is make sure you're dealing with the person you think you're dealing with before you actually issue them a credit card or give them a loan that's.

What a fraud alert does. Now the good news is they're, totally free. You don't have to pay for them.

They've been free since legislation was passed a few years ago that made them free. So they're totally free here's. The other nice thing you only have to call one of the three credit bureaus.

Once you have a fraud alert place on your credit file at one of the three credit bureaus. They will notify the other two for you that's exactly what happened in my case. And I got emails almost instantaneously. Certainly the same day from all three credit bureaus confirming that a fraud alert had been placed on.

My file now, what you see on the screen is from the federal trade commission again, I'll leave links to all of this below the video, this walks through how fraud alert alerts work. And what you'll learn is that there are actually three different kinds of fraud alerts. So here's the deal with a'll call it a regular fraud alert again. You can put it on your credit report for free. You just call one of the credit bureaus to do it. They'll notify. The other two couldn't be any easier, but it only lasts.

One year you can renew it, but you have to remember to do that if you just let it go it's going to expire after a year. So there are two other types of fraud alerts that you can consider. The first is called an extended fraud alert. You can see that here. The FTC has a page on this. And if your identity has actually been compromised. So imagine someone's actually taken out a credit card in your name or a car loan.

For example, you can get an extended fraud alert, put on your credit that lasts seven years. Now in order to do this, though you first have to report the identity theft at identitytheft.gov, I mentioned this website in the last video it's, where you can go to it's a federal trade commission, run website and report identity theft as I mentioned in the last video, someone actually has to use your identity to for example, get a loan or a credit card if they attempt to do that but fail, which is effectively. What happened?

In my case, that's, not the kind of thing that you're going to report to. Identity theft.gov, but if they're successful, you can report it. And then once you've done that you qualify for an extended fraud alert of the last seven years now, there's, actually a third type that many folks don't know about, and it's called an active duty, alert, so it's a little different from a fraud alert. But it effectively does the same thing for members of our military that are on active duty. It just alerts creditors that well, you're on active duty and to reach out to you to confirm that you.

Are the person applying for credit. So for example, if you're stationed overseas, and I don't know someone in Topeka tries to open up the best buy credit card and Best Buy sees this active duty. Alert, you know, they're going to take steps to make sure that it's, actually you're applying for the credit now with an active duty alert.

You can renew it every year that you're on active duty. So fraud alerts are a great tool to use they're very easy. Again, notify one bureau. They notify the other two for you, it's.

A. Quick phone call it's free. And there are as I mentioned, three different kinds, the regular fraud alert, an extended fraud alert. If your identity has actually been stolen last seven years and for members of our military on active duty, there's also an active duty alert. Now, having said, all of that, my strong preference and recommendation. And what I'm doing is to actually put a credit freeze on my account now they're different.

And so let's get right to them. And again, the FTC has an excellent page of. Information on how a credit freeze works, but uh, here's.

Here are the basics and what you need to know first they're, totally free, just like a fraud alert. The same statute passed a couple of years ago made credit freezes free, uh, it actually followed from a data breach from one of the credit bureaus that sort of triggered that new legislation. So credit freezes are totally free. One big difference though you have to you have to set up the freeze with each one of the three credit bureaus. You. Can't just freeze your credit at one and expect them to notify the other two doesn't work that way having said that it's extremely easy to do. I was able to do it in a matter of oh about a half hour, total time.

I think one was done on the phone with Experian, uh, one with TransUnion. It was done by the by phone, but I didn't even have to actually interact with a human being. It was just all computerized. And with the third, uh Equifax.

I just I did it online it's, very simple to do. But again, you have to. Do it with each of the three credit bureaus now here's. Another big difference with a fraud alert, a potential lender can still gain access to your credit. So imagine someone who has stolen your identity. They could apply for say, a credit card.

And the credit card issuer would have access to your credit file. Now they would see the fraud alert, and then they would be required to confirm your identity, but they would still get access to your credit report. One option with credit freeze would be to say. Look, I don't, even want them to get access to it. I want to freeze them out if you will from even looking at my credit report and that's, what a credit freeze does, and it's, frankly, why I prefer it now there are at least one potential downside to a credit freeze. And that is creditors are frozen, uh, frozen out. Or I don't know, prevented from looking at your credit report, even if you're the one applying for the credit.

So if you're going to apply for a credit card or some other sort of loan, you'll need. To remove the credit freeze before you do now again, the good news there is it's very easy to do. You can do it online, uh.

So you could go in and remove the credit freeze under federal law. They have to remove it within one hour. If you request them to do so either online or by phone, and you could then apply for credit. And when that process is done, you could go back and add the freeze back onto your credit file. So are there a few more hoops you have to jump through if you want to apply for credit. For yourself, yes, but I personally think unless you're in some situation, where you're applying for a lot of credit over an extended period of time.

I think the credit freeze is the much better way to go over a fraud alert so that's, the fraud alert. Now we have the credit freeze. And as I said, I've done that for all three of my credit reports, and I'm in the process of doing it for my wife, and I'm also going to do it for our grown children, or at least talk to them and get them to do it, frankly, at. This point given the amount of identity theft, that's occurred data, breaches that have occurred. I think the default view should be put a credit freeze on each of your three credit reports now beyond that you're going to hear the term credit lock. What does that mean? Well, what?

Uh, the three credit bureaus have done is taken a credit freeze and then added additional I'll call them features and then charge for it. So the credit lock unlike a credit freeze or a fraud alert costs money. What they.Typically, do are a couple of things. They add credit monitoring to it, and they promise to remove the credit lock if you want to apply for credit immediately, you don't have to wait for that that full one hour. Now if you're like me, it's like, I don't really care about waiting for an hour, and I can get I can monitor my credit through any number of credit card issuers who will do it for free. So in my view, most people don't need a credit lock it's, just not worth the money. I suppose some of you.

Might just think it's easier, and I feel safer, and I can remove the lock immediately, and it's worth the money, but keep in mind that depending on which credit bureaus you use, and presumably you'd want to use all three, you know, you're going to be spending 25 to 50 bucks a month on credit locks. And again, for my money, it's just not worth it. But I pointed out here because you'll see it. And when you go to freeze your credit with the credit bureaus, you'll, see advertisements and links for a credit. Lock and I don't want you to be confused about what a credit lock is versus a credit freeze. So again, a credit freeze is free. It freezes out all potential lenders from looking at your credit report.

All a lock does is add a few extra features provided by the credit bureaus, but again, they charge for it. And frankly, particularly when it comes to credit monitoring, you can get those features for free elsewhere. So there you go that's, a fraud alert, a credit freeze and a credit lock extremely. Important and a great way, particularly the freeze or maybe the fraud alert to protect your credit from a potential data, breaches or identity theft. Now I mentioned access to my notes. Let me show you that.

This is the page I've created fraud alert versus credit freeze versus credit lock. Let me add that I keep my notes in a tool called Rome research. This particular file is where I'm keeping basically all the personal finance and investing content that I discuss on this channel. My goal is over.

Time, this will be hopefully a wealth of information and resources that you can use to help improve your finances again. I give access to it for free for those that sign up for my newsletter, which is also free. So if it's something that's of interest to you, you'll, see in the description below the video how to sign up for the newsletter, and you'll get instant access to these notes. And if that's not of interest to you, no worries I'm also going to include the links to the resources at the FTC that me. Mentioned in this video below in the description, and if you have any questions as always just leave a comment I'll do my best to help any way that I can until next time, remember, the best thing money can buy is financial freedom.


18-Apr-2022

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