What is a fraud alert?

A fraud alert serves as a warning mechanism for lenders, signaling that there may be potential identity theft associated with an individual's credit report. When a fraud alert is placed on a credit file, it prompts creditors to take extra steps to verify the identity of the individual before extending credit. This is particularly important in scenarios where the individual may suspect that their personal information has been compromised or misused, as it helps protect consumers from unauthorized transactions and false accounts being opened in their name.

The function of a fraud alert is specifically designed to protect individuals from the risks posed by identity theft. It adds a layer of security by requiring additional verification from lenders, which is crucial for safeguarding one’s financial health and credit reputation.