The following is good information for servicemembers from the Consumer Financial Protection Bureau (CFPB) to help them safeguard their credit.
The Fair Credit Reporting Act (FCRA) provides three types of alerts to protect your credit file from potential fraud or identity theft.
The Consumer Financial Protection Bureau has received a number of complaints from deployed servicemembers who reported damage to their credit reports because of identity theft or other misuse of their accounts while they were on active duty. And while the Bureau has received hundreds of these complaints, few consumers reported initiating an Active Duty Alert prior to leaving for active duty. Servicemembers can protect themselves from such harm by initiating an Active Duty Alert.
What alerts are available?
- Active Duty Alert
- Initial Alert
- Extended Alert
Each of these alerts notifies users of your credit report of the potential for fraud or identity theft. The lender will have to take reasonable steps to verify the identity of someone who requests new credit in your name before they can approve it. New credit includes opening a new line of credit in your name (except for an open-end credit plan such as a credit card), issuing an additional card on one of your existing credit accounts, or increasing your credit limit. If the lender does not verify the requester’s identity, it will not approve the request.
TIP: These alerts do not prevent you from adding to the balance on an existing line of credit or credit card within your existing credit limit.
Which alert should I get?
Active Duty Alert
This alert is available to you if you are in the military on active duty and are assigned to service away from your usual duty station. The alert notifies credit reporting companies of your military status, which limits new credit offers while you’re away.
Here’s how it works:
- Lenders are notified that you have an alert on your credit file and they must take reasonable steps to verify the requester’s identity before approving new credit.
- The alert lasts twelve months (unless you remove it sooner.)
- Your name will be removed for two years from nationwide credit reporting companies’ prescreening lists for credit offers and insurance (unless you request otherwise.)
Initial Fraud Alert
This Alert is available to you if you have a “goodfaith suspicion” that you have been or will be a victim of identity theft or fraud.
TIP: This alert is a good first step if you’re worried your identity has or will be stolen. You don’t have to wait until it happens to you. The alert provides you with the right to request a free credit report so you can keep an eye out for anything suspicious.
Here’s how it works:
- Lenders are notified you have an alert on your credit file and they must take reasonable steps to verify the requester’s identity before approving new credit.
- This alert lasts 90 days (unless you remove it sooner.)
- You also have a right to one free consumer report from each of the nationwide credit reporting companies. (This is in addition to the free annual report all consumers are entitled to.)
Extended Fraud Alert
This Alert is available to you if you actually have been a victim of identity theft and have filed a qualifying “identity theft report” with one of the nationwide credit reporting companies.
TIP: To create a report online, visit www.identitytheft.gov. This alert requires lenders to contact you before approving new credit for you. It also gives you the right to request two free credit reports while limiting new credit offers.
Here’s how it works:
- Lenders are notified you have an alert on your credit file, and, if you provided a phone number or other contact method, they must use this information to verify the credit requester’s identify (or verify the requester’s identity in person) before approving new credit.
- This alert lasts seven years (unless you remove it sooner.)
- You also have a right to two free consumer reports during the first 12 months after adding the alert to your account from each of the nationwide credit reporting companies. (This is in addition to the free annual report all consumers are entitled to.)
- Your name will also be removed for five years from the nationwide credit reporting companies’ pre-screening lists for credit offers and insurance (unless you request otherwise.)
TIP: All consumers can limit new credit offers by getting off pre-screening lists. To do so, visit the FTC’s site at: www.consumer.ftc.gov/articles/0148-prescreened-credit-and-insurance-offers. You can do this temporarily or permanently.
How can I get these alerts?
To add an alert, you can call, go online, or write to any one of the three largest nationwide credit reporting companies (Equifax, TransUnion, Experian.) You will be required to verify your identity. Once you place an alert with one nationwide credit reporting company, the alert will be added to your credit report with the other companies.
TIP: You can remove any of these alerts by using the same method you used to initially add the alert. And it’s free to place and remove these alerts. After contacting one company, you don’t have to contact the others. Here’s the contact information for the three largest credit reporting companies:
- Equifax: (800) 525–6285
- Experian: (888) 397–3742
- Transunion: (800) 680–7289
What if I want more protection?
The above alerts provide notice to lenders about potential fraud activity but do not fully prevent access to your credit file. If you want to completely prohibit the release of your credit file to potential new lenders, you may want a Security Freeze. The security freeze will stop these lenders from access to your credit file, which would prevent the approval of new credit. Requirements and small charges for a Security Freeze vary by state, and you have to take affirmative steps to lift the freeze when you want to use your credit record. More information about credit freezes is available at: www.consumerfinance.gov/askcfpb/1341/what-security-freeze-my-creditreport.html.
Where can I get more information on this topic and others pertaining to servicemembers?
Go to the website for the Office of Servicemember Affairs to find more resources, guides, tips, and news for servicemembers, veterans and their families. Or, take a look at some of the frequently asked questions on the subject at Ask CFPB at www.consumerfinance.gov/askcfpb