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Just 17% Have Frozen Their Credit Reports and/or Set Up Fraud Alerts

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

The threat of identity theft is as present as ever in America. However, according to a new report from LendingTree, just about 1 in 6 Americans are currently using either of the best weapons in their arsenal to fight it.

LendingTree reviewed more than 940,000 anonymized credit reports and found that only 17% of those had either a credit freeze or a fraud alert in place.

A fraud alert on your credit report requires a lender to verify your identity before approving you for new credit. A credit freeze, however, is a far more severe step. It prevents anyone — including lenders — from accessing your credit report without your approval. When it comes to identity theft protection, it’s the nuclear option.

These aren’t for everyone, especially those who plan to apply for new credit soon, and there are alternatives available. However, that just 17% of Americans have either one of these in place is disturbing. That’s because identity theft is rampant. In 2020 — the most recent full year for which data is available — there were 1.4 million reports of identity theft, according to the Federal Trade Commission (FTC).

It’s also disappointing because it’s free to freeze and thaw your credit report and place a fraud alert. Federal law made it so in September 2018, but it’s clear that far too few people are taking advantage of these services.

Key findings

  • Just 17% of consumers have a fraud alert and/or a credit freeze on their credit reports. In all, 10% have a credit freeze, 9% have a fraud alert and 2% have both.
  • Colorado residents were most likely to have at least one of those protections in place. The least likely? Tennessee and West Virginia.
  • Nevada and New York were most likely to have fraud alerts, while West Virginia and Maine were least likely.
  • When it comes to credit freezes, Colorado, Washington and the District of Columbia led the way. Louisiana and Tennessee were at the bottom of the list.
  • Rhode Island and Kansas lead in identity theft complaints, but lag in getting protected. These two states had, by far, the highest rate of identity theft complaints. However, Rhode Island and Kansas residents ranked just 17th and 18th, respectively, in the U.S. for either kind of credit report protection.

Just 17% of consumers have either a fraud alert or a credit freeze

Despite identity theft being common, only a small fraction of Americans have chosen to freeze their credit or put a fraud alert on their report.

To be clear, we’ll always have a large portion of folks who don’t have either of these protections. For example, people who are about to apply for a new credit card, purchase a car or obtain a mortgage will need to thaw their credit freeze to successfully get those loans.

In addition, many companies offer a “credit lock” option. A lock offers many of the same protections as a freeze but is typically easier to undo. Unlike freezes, however, locks aren’t governed by law — and they’re not always free. Regardless, they’re a commonly available alternative.

Still, that just 17% of consumers have either a fraud alert or a freeze in place is eye-opening — that percentage needs to grow.

Credit freezes (10% of consumers have them) are slightly more common than fraud alerts (9%), and 2% of consumers even have both.

National overview
Fraud alert Credit freeze Both Either or both
9.4% 9.9% 2.1% 17.2%
Source: LendingTree internal, anonymized consumer data.

While having both a freeze and a fraud alert in place at the same time typically won’t cost you anything and might make you feel extra secure, it’s not necessary. When a freeze is in place, a fraud alert becomes moot since the freeze completely locks down access to the report.

Most likely places to have either a fraud alert or a credit freeze

Colorado residents are the most likely to have either a fraud alert, a freeze or both. More than 1 in 4 Coloradans (27%) have one or both, edging out the District of Columbia (25%) and Washington (23%) for the crown.

10 states with the most fraud alerts and freezes
Rank State Percentage of credit reports with a fraud alert and/or credit freeze
1 Colorado 26.5%
2 District of Columbia 24.8%
3 Washington 23.3%
4 Nevada 22.4%
4 New York 22.4%
6 Georgia 22.3%
7 Maryland 20.5%
8 California 20.2%
9 Florida 19.9%
10 New Jersey 19.5%
Source: LendingTree internal, anonymized consumer data.

The least likely states to have either of these protections are Tennessee (6%) and West Virginia (7%). Six of the seven least-likely states are in the South, with North Dakota as the only exception.

10 states with the fewest fraud alerts and freezes
Rank State Percentage of credit reports with a fraud alert and/or credit freeze
1 Tennessee 6.3%
2 West Virginia 6.6%
3 Louisiana 7.7%
4 Arkansas 8.3%
5 Mississippi 9.0%
6 North Dakota 9.2%
6 Kentucky 9.2%
8 Vermont 9.7%
9 Nebraska 10.5%
10 Wyoming 10.7%
Source: LendingTree internal, anonymized consumer data.
The nation’s most populous states are more likely than smaller ones to have a freeze or fraud alert. For example, New York, California, Florida, New Jersey and Illinois are among the 12 most likely, while Texas is close behind at 16th.

When looking at each protection individually, the rankings change a bit:

  • Fraud alerts: Nevada and New York top the list, with Colorado and D.C. close behind. West Virginia and Maine are at the bottom of the list.
  • Credit freeze: Colorado tops the list, with Washington second and D.C. third. Louisiana and Tennessee bring up the rear.

Still, it’s clear that Colorado is the reigning fraud protection capital of the country, while the South has some work to do.

Rhode Island and Kansas: Lots of identity theft complaints, not much protection

When it comes to identity theft reporting, two states — Rhode Island and Kansas — stand far above the rest. According to FTC data from the first quarter of 2021 through the third quarter (the latest available), Rhode Island had 1,758 identity theft reports per 100,000 residents, while Kansas had 1,299.

Only two other states — Illinois (793) and Louisiana (548) — had more than 500 reports per 100,000 people.

States with the most ID theft complaints per population
Rank State Reported ID thefts per 100,000 population
1 Rhode Island 1,758
2 Kansas 1,299
3 Illinois 793
4 Louisiana 548
5 Georgia 475
6 Colorado 444
7 Nevada 428
8 New York 387
9 Florida 386
10 Texas 368
Source: Federal Trade Commission; data is from Q1 through Q3 2021 (latest available)

In fact, Rhode Island had more reports per 100,000 people than the bottom 17 states on the list combined.

Regarding fraud protections, however, Rhode Island and Kansas barely crack the top 20 most protected, placing 17th and 18th, respectively.

When folks in these states do opt for identity theft protection, their weapon of choice is most often a fraud alert. Both rank among the top 10 states for fraud alert sign-ups, but in the bottom half of the nation for credit freezes.

Full rankings

The bottom line: These tools can be helpful, but not everyone needs one

While credit freezes and fraud alerts are both free and are roughly equally common on credit reports, they’re very different products and shouldn’t be considered interchangeable.

Fraud alerts require a lender to verify your identity before issuing credit in your name. They typically only last a year, though they can be renewed afterward. (If you’re already a victim of ID theft, however, you can have an extended fraud alert that lasts for seven years.) Finally, when implementing a fraud alert, you only need to tell one of the three major credit bureaus — Equifax, Experian or TransUnion — as they’re required to tell the other two.

Credit freezes, however, seal up your credit report like Fort Knox. No one can open a new credit account in your name until that freeze is lifted, and it generally doesn’t expire. Lastly, you’ll need to tell all three bureaus yourself that you want a freeze — in this case, they aren’t obligated to tell the other two. So, which one is for you?

If you’re planning to apply for a new credit card, auto loan or mortgage soon, a fraud alert is a better choice — it gives you some protection without completely cutting off your access to credit.

If you’re not planning to apply for anything anytime soon, there’s really no reason not to opt for the credit freeze instead. By closing access to your report entirely, it eliminates the chance that a scammer might have enough information about you and your identity to work around a fraud alert. With a freeze, no one gets into your credit report — not even you — until you thaw it.

There are other, less-severe options out there — one such option is credit monitoring, like what we offer for free here at LendingTree. But if you’re looking to completely close the door on identity thieves, it is tough to beat a credit freeze.

Methodology

LendingTree researchers analyzed over 940,000 anonymized credit reports from November 2021 to calculate the percentage in each state that had either a credit freeze, fraud alert or both.

Fraud report data is from the Federal Trade Commission. The data is from the first quarter of 2021 through the third quarter of 2021 (the latest available).

 

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