6 facts to know about active duty credit alerts
By Tina Orem
December 4, 2014
The Defense Readiness Conditions system, nicknamed DEFCON, is used by the Department of Defense to indicate the threat of nuclear war. The system keeps everyone alert and aware of the current state of affairs in tense global situations.
If only it worked like that for credit reports.
After all, while they're busy keeping things at DEFCON 5, deployed soldiers are especially vulnerable to identity theft because they can't keep a close eye on their bank accounts and credit reports when they're in the middle of a war zone.
In fact, the percentage of military members reporting identity theft (30 percent) in a 2013 study of complaints to the Federal Trade Commission is more than twice that of the general population (14 percent).
That's why active duty credit alerts can be so useful to members of the military. Here are six facts you should know about them:
1. They are easy to get but can slow things down. Active duty alerts are not typical fraud alerts. Active duty alerts last only one year (they can be renewed to match the period of deployment); fraud alerts last from 90 days to up to seven years. Fraud alerts also require you to show proof that you've been a victim of identity theft. That's not the case for active duty alerts.
Generally, all you have to do to place an active duty alert on your credit file is contact at least one of the three credit bureaus and ask for it. It's free. Within 24 hours of placing an online alert request with, say, Equifax, the credit bureau will tell the other two reporting bureaus (Experian and Transunion).
Once they're in place, active duty alerts require businesses to verify your identity before setting up a new credit card in your name, issuing a new card on an existing account you may have or increasing the credit limit on an existing account.
“Service members and their families should be vigilant in managing and inspecting credit bureau reports and data.”
–Rob Smith, ClearPoint
That's where it can get complicated, says Harrine Freeman, CEO and owner of credit counseling firm H.E. Freeman Enterprises. Active duty alerts may affect approval if you need to apply for insurance, a new job or obtain security clearance, she says. But, the business will usually notify you that they were unable to process your application.
2. You'll need to have someone back home you can trust. In case of emergency, “military personnel may name a representative while they are deployed to place or remove the alert,” Freeman explains. Often this is a spouse or other trusted person who can act on your behalf to verify your identity. But trust is literally the key, because you'll need to give your trusted person the PIN number associated with the credit alert, and that unlocks everything, she says.
Also, make sure your designated representative knows how to get in touch with you while you're gone.
Some other paperwork is often in order to maximize the usefulness of an active duty alert via a designated representative. “Pre-deployment military processing frequently includes the preparation of powers of attorney,” says Rob Smith, a certified credit counselor at ClearPoint Credit Counseling Solutions in Watertown, New York.
3. You may need to plan your credit use in advance. Sometimes legal preparations don't fly with certain lenders, though, so check with lenders in advance to make sure your arrangements meet their requirements, Smith cautions. The alert can create complications in the purchase of necessary items, such as automobiles or appliances, Smith said. Even renewing phone or Internet contracts, housing leases, or changing utility providers could create a challenge. “Timely authorization is the key,” he said.
4. Think twice if you're being stationed stateside. Smith says the benefits of an active duty alert actually depend on where you're deployed. If communication is good in a deployment area, an alert may be unnecessary.
“For a service member who is away from home station for training at a stateside base or for a short-duration temporary duty assignment, an active duty alert may be less appropriate, since the alert lasts a full year,” Smith says.
5. You won't have as much mail. Placing an active duty alert reduces the number of pre-approved credit card and insurance offers you receive for two years, the Federal Trade Commission says. And according to the Consumer Federation of America, this prevents identity thieves from stealing your mail and accepting those pre-approved offers in your name.
6. Stay on top of your credit reports. The active duty alert is a great security blanket, but don't get complacent. You need to make sure your credit reports are pulled and checked regularly for any suspicious activity. Your representative, with power of attorney, can get a free credit report from one of the three major credit bureaus every four months by going to AnnualCreditReport.com.
Identity theft is the last thing a soldier wants to come home to. And that may be the best reason to look into placing an active duty alert on your credit if you're about to be deployed. After all, a danger foreseen is a danger half avoided. “But in all cases, service members and their families should be vigilant in managing and inspecting credit bureau reports and data,” Smith warned.