What is Credit Fraud Alert?

What is Credit Fraud Alert?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated October 14, 2020

Unknown charges on your bank statements? New phone bills you’ve never applied for? Unfamiliar charges on your credit report? These are telltale warning signs of Identity theft: a very terrifying but very real problem we face in our ever-growing technology bound world. No one is spared when it comes to it. We’ve all either been victims of it or know somebody who has. 

Dealing With Identity Fraud In Canada

Identity theft is one of the most terrifying fraudulent acts you can come across in your lifetime. When you’ve been a victim of identity theft, it means someone out there has access to your personal information and is using it for criminal purposes. They can have information from your name to your driver’s license to your credit cards and even your SIN. With access to such information, they have the capacity to commit several criminal acts against you.

  • Create new accounts in your name. It can range from something as simple as a new phone account to new credit card or bank accounts.
  • Take out multiple loans through online loans.
  • Use your identity to buy a new car.
  • Use your credit or debit card accounts to make purchases unbeknownst to you.
  • Create new identifications with their likeness

Criminal acts like these can be extremely damaging to your credit health, making it difficult for you in the future when you want to apply for a loan or new credit account that requires a credit check. It can also lead to an incredible amount of debt which will land you in a nightmare of paperwork to try and prove you’ve been frauded. With a looming threat like this, it’s only natural to want to know what you can do to protect yourself from it.

Take Precautions

Understanding how these criminals gain access to your personal information is one way of taking proper actions that will protect you. Typically, information is gathered through data breaches, hacking, malware attacks, dumpster diving, stealing your mail, wallet or purse and more. So how do you keep yourself safe from it all? There are many ways to protect yourself from Identity theft, some of which may seem obvious but, it’s always a good reminder. 

  • Don’t carry your SIN card or any extra credit cards when you go out. Leave them at home.
  •  Don’t give your SIN, passwords, or other personal information that can lead to identity theft to people who email or call you.
  • Use a shredder when discarding personal or confidential information. 
  • Double-check your bill statements to make sure all transactions are yours.
  •  Protect your computer – do not download anything from someone you do not know or trust.
  • Monitor your credit report. 

Click here to see the four things you should periodically observe on your credit report.

By taking these precautions in your everyday life, you will reduce your chances of identity theft. But as you know, these methods aren’t foolproof and sometimes data breaches are out of your control. So, despite your best efforts, you find yourself a victim of identity theft, adding a fraud alert to your credit file is a solid way of creating your own “firewall” against it. 

Monitor Your Credit File

A fraud alert is one of the best ways to prevent the effects of identity theft. In Canada there are two national credit bureaus you can place an alert with; Equifax and TransUnion. Placing a fraud alert on your credit file with these credit bureaus will inform lenders and creditors of your situation and that they should take extra measures to identify you, such as calling you before offering credit. 

For example, when you apply for a credit, a mortgage, a car loan, or even a new credit card, companies will check your credit worthiness as a way to gauge your ability to pay what they offer you. This is when the fraud alert will come into play. When lenders go to check your credit file, they will see the fraud alert on your account and know that they must take extra precautions to confirm you are who you say your are.

This is especially a great service for people living in the provinces of Ontario, Manitoba, and New Brunswick as they have a legislation around fraud alerts. It dictates that all lenders must take proper steps to verify the person’s identity before opening any new accounts or modifying existing

If you’re interested in learning about your credit report click here.

How Do You Place a Fraud Alert? 

Each credit bureau has its own processes when placing a fraud alert on your credit line. As mentioned before there are two national credit bureaus in Canada: Equifax and TransUnion. When placing a fraud alert on your file you should consider placing it with both credit bureaus as some lenders only check in with one credit bureau. By placing an alert with both the credit bureaus you’re increasing the chances of catching any fraudulent activities. 

Applying With Equifax

You can place a fraud alert with Equifax by contacting their customer service at the toll-free number 1-800-465-7166 or 514-493-2314. You’ll need to provide some personal information, so, be ready to answer questions regarding your identity, including your SIN. Your alert can last sex years and cost $6 plus tax. 

Applying With TransUnion

You can place a fraud alert on your credit file with TransUnion by either creating an account online through their website or by completing their form called “Mail Request for Potential Fraud Warning on my credit file”. You’ll also need to photocopy a piece of ID when submitting the form. You can also place an alert on your file by simply calling TransUnion at 1-800-663-9980 and providing some personal information. The alert can last six years and will cost you $5 plus tax. 

If you’d like to extend or cancel your fraud alerts, you may do so by contacting the appropriate credit bureau. 

Dealing With Fraud Issues

If you realize too late and are now a victim of identity theft, there are some steps you can take to prevent any further damage to your credit report and name. 

  1. Contact your local authorities and report the theft of your identification. This will be the proof you provide your banks to erase any unauthorized debt taken under your name. 
  2. Contact your financial institutions and file an Identity Theft Statement. By doing so they can start an investigation into any fraudulent charges.
  3. Change your passwords.
  4. Call both TransUnion and Equifax to place a fraud alert on your credit file and to obtain your credit report to check for any further suspicious activities. 

You can also check out this article if you want to learn more on how to dispute any unfamiliar items on your credit report. 

Protected and Ready to Move Forward

Understanding what a fraud alert is and how to place one on your credit file is the information you need to take quick actions to defend yourself against potential identity theft. This is especially pertinent as identity theft can lead to huge debt, bad credit, and even bankruptcy.  

Taking precautions in your everyday life like updating passwords, regularly checking your bank statements and credit report are greats ways of preventing it altogether.

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Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

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