What Does High Risk Fraud Alert on a Credit Report Mean?

High risk fraud alerts are one of the cheapest ways to stop an identity thief from stealing under your name. Creditors, however, can render this fraud prevention ineffective if they choose to ignore the proper protocol when consumers have an alert on their profile. If you want better protection than a fraud alert, you should look into a credit freeze.

When consumers have a high risk fraud alert on their credit report, the lender is supposed to ask them to furnish appropriate identification, such as a drivers license. The alert is a note included in the credit report that tells the lender that somebody might be trying to take out a loan in your name. Anybody can request an initial alert by contacting one of the three major credit bureaus, who will then notify the other agencies once they approve your request. The initial alert lasts for 90 days.

An extended fraud alert stays on your credit report for seven years, but to get one requires more than just a phone call. You must be a victim of identity theft and provide proof, such as a police report. Alternatively, you can request an initial fraud alert every 90 days as many times as you want. Initial alerts, however, are less secure because you could forget about it or it might prove too inconvenient. The thief might not even use your stolen information within 90 days.

The law on taking proper measures to verify identity when a lender sees a fraud alert is extremely vague. More often than not, lenders simply ignore fraud alerts, according to MSN MoneyCentral. Also, fraud alerts are useless for protecting existing accounts, because lenders have already approved the account. The verification process for a fraud alert can delay an application for credit, especially time-sensitive special offers.

The major credit rating bureaus have printable, online forms so customers can request the removal an alert. You will have to fill this out and send it via snail mail and include verification of your identity before the agency agrees to remove a fraud alert.

The three major credit bureaus are required to give one free credit report--which does not include a score--each year. You cold request one every four months and monitor your own credit. You could do a credit freeze. A credit freeze stops anyone from looking at your report. The downside to this is the hassle. You will have to approve each lender before he can look at your credit report. The benefit is that a would-be thief cannot take out a loan in your name unless he finds out your special PIN or password. Also, you will have to pay about $10 for a credit freeze with each bureau as of 2010.