Credit Fraud Alerts Work A Bit Too Well

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credit report fraud alertI guess having a fraud alert on my credit report works a bit too well. It isn’t as big of a problem as credit fraud alerts not working at all, but it is a bit frustrating. What exactly am I talking about?

Remember a couple months ago when I thought I was dealing with a little bit of credit card fraud that actually turned into identity theft? Well… when that happened I immediately put a fraud alert on my credit report.

That fraud alert is designed to prevent others from opening any new credit in my name. The key there, is to prevent OTHERS from opening new credit in my name… not me.

DENIED!

No… I wasn’t featured on the Suze Orman show this weekend. Sorry to disappoint you. Instead, that was the unfortunate response I received this weekend when I was applying for a new credit card. I was a bit surprised to find out that I had been denied for a credit card because my credit is pretty good.

I called the credit card company’s reconsideration line to see if I could find out why I was denied. I figured maybe I was denied because I had just taken out a new mortgage, but other than that I was still pretty puzzled.

The credit card representative asked me what phone number I had used when I applied for the card. I thought this was a bit weird, but I told her which number I had used. She then said she had to do some research on my phone numbers and would have to call me back on a verified line.

After doing a few minutes of research she told me she wouldn’t be able to continue with the application process due to a special circumstance which she could not disclose to me… That struck me as really strange until I told her the following.

Is This Because I Have a Fraud Alert on My Credit Report?

Well… now that you mention it that is the problem! The credit card company representative explained that when someone has a fraud alert on their credit report they have to be able to verify my phone number and my address on my application going back at least 3 months time.

The problem with my application is that they could only verify my address going back one month… which makes perfect sense because I had just moved a little over a month ago. I asked her what we could do to resolve this problem and she said there really isn’t anything that we can do except wait until I’ve lived at my new house for three months.

Bummer! I then followed up to see if there were any other reasons why I was denied for the credit card I applied for. The representative informed me that was the only reason I was denied and that I should call back in two months since applications are good for 90 days. I wasn’t aware of that, but it is good info to know if you’re ever denied for a card for something you can fix quickly.

Finally, I asked the representative if they’d have to pull my credit report again when I call back in two months to be reconsidered for the credit card I applied for. She informed me that it isn’t company policy, but some representatives will insist that they pull another credit report. 

So, that’s what I’ve learned about how fraud alerts really affect your credit report. The good news is, because I couldn’t get a new line of credit myself, I doubt a fraudster could either. The bad news is… I couldn’t get a new line of credit and if I had needed it that could have been a real problem. Luckily, it wasn’t a necessity, but just a new card I wanted to add to my wallet.

Have you ever placed a fraud alert on your credit report? How did it affect you? Did you have any weird stories like mine from this weekend?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. Fat free personal finance says:

    I have never placed a fraud alert on my report, but since I used to underwrite and originate loans, I have seen many. The process is exactly as you described. Your representative sounded confused, however, we were told clearly that it was due to a fraud alert so there was rarely confusion.

  2. That’s interesting, though I would imagine that would give “you” a bit of peace of mind knowing that someone else could not open an account either. I did not know that their applications were good for 90 days, hopefully they won’t require to pull another report when you call back in 2 months.

  3. I never have. We check our credit reports every four months, rotating between the three free ones you get every year. This has so far worked well.

  4. A long time (15-20 years) ago, I had an instance where someone tried to steal my identity. I alerted the 3 credit agencies and put a freeze on my account. Supposedly no one could inquire on my account without alerting me. I never had another problem.

  5. I’ve never heard of being able to put a fraud alert on a credit report before! Seems like a pretty good idea, even with the extra hassles. If I need to do that in the future, hopefully I won’t run into the same issues you’re having now if it were an emergency.

  6. I have never heard of this before. I guess I’ll have to look out for it if I ever get fraud alert put on my account. Sorry to hear you were denied.

  7. Yes I’ve suffered with this. I was in Morocco and needed a last minute flight and was denied use of my card when attempting to buy a plane ticket. I seem to remember having to mess about for ages, photocopying my passport and debit card and faxing them. This wasn’t easy in country that speaks Arabic. Surely a simple phone call should suffice? Saying that, should a £100 plane ticket really be such a problem anyway?

  8. I have never heard of this but I guess it is doing the trick… bummer is time has to pass before you can execute on your goals. I wonder what happens at the end of the 3 months… is there a way to test that the fraud alert works the same way?

  9. Great Article! It was very unfortunate that you had to wait that long. At least it insured you 3 fraud free months! Hopefully they will develop a system soon that will not interfere with credit reports when fraud alerts are made.

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