Fraud alert

A fraud alert is a red flag telling creditors to contact you before new credit is opened in your name or changes are made to existing accounts. You can place this notice on your credit reports if you’re concerned you are or may become a victim of identity theft.

Pros:

• You need to contact only one of the three major credit bureaus to set up an alert — Equifax, Experian or TransUnion. The credit bureau you contact must then notify the others to place an alert on your credit reports.
• It’s free.
• A fraud alert does not affect your credit score.
• The alert lasts one year. If you want to keep it, you have to renew it.
• Victims of identity theft can keep a fraud alert in place for seven years. To get an extended fraud alert, submit an identity theft report to the Federal Trade Commission at IdentityTheft.gov or file a police report.
• You can add or remove a fraud alert at any time. You don’t have to remove the alert if you’re shopping for a loan.

Cons:

• It’s easy for folks to forget to renew a fraud alert.
• With a fraud alert, a lender is supposed to verify your identity before it issues credit. But this doesn’t always happen. “Not all creditors are going to respect that restriction,” Krebs said. “Some of them pull up your credit anyway.”