For loans, credit cards, and other lines of credit, it’s important to have good credit. Lenders use your payment history, amounts owed, credit age, new credit, and other information on your credit report to decide if they want to give you credit. If there is a flag on your credit report, it tells lenders that they need to look into your credit further. Let’s talk about what credit flags are and how they can affect your money in this article.
Understanding Credit Report Flags
A flag on your credit report simply indicates that the information in your file merits extra scrutiny The flags themselves don’t directly hurt your credit score But they do highlight potential issues that could make lenders less likely to approve you for new credit products, Let’s look at some common reasons why flags get added to credit reports
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Suspected Fraud: If a lender believes you may be a victim of identity theft, they can ask the credit bureaus to add a fraud alert to your report. This flags your account and requires verifying your identity before issuing new credit in your name.
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Disputed Information: When you contest inaccurate or unverified information on your report, the credit bureaus add a dispute flag while they investigate. This alerts lenders that the data may change or get removed later.
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Collections Activity: If an account gets sent to collections, the collection agency may flag it when reporting it to the credit bureaus. This indicates that you have an outstanding debt in collections.
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Account Delinquencies: Late payments, bankruptcy, repossessions, and other bad credit events often set off alarms that show how bad the delinquency is.
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Multiple Credit Inquiries: Applying for a lot of new credit in a short period results in many hard inquiries on your report. A lender may flag this to indicate credit shopping behavior.
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Large Account Balances: High balances near your credit limits could indicate higher risk, so lenders may flag accounts with exceptionally high utilization.
How Credit Report Flags Impact Your Finances
The presence of flags on your credit report can make getting approved for new credit more challenging. Here are some potential financial impacts:
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Higher Interest Rates: Lenders may offer higher interest rates to compensate for the additional risk highlighted by credit flags. This increases the cost of borrowing money.
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Lower Credit Limits: Issuers may only approve you for a small credit limit or deny your application altogether due to credit report flags. This restricts access to credit.
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More Security Deposits: To cover the risk of not paying, landlords and utility companies often ask applicants with credit report flags to put down bigger security deposits.
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Denials for New Credit: It becomes much harder to get approved for financing if your credit report contains multiple unresolved flags. They imply higher risk.
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Requests for More Documentation: Lenders may ask for more proof of income, identity, or assets when your report is flagged to further verify your creditworthiness.
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Lower Credit Scores: Although flags themselves don’t directly reduce your scores, the underlying issues they point to often cause your scores to drop significantly.
Tips for Handling Credit Report Flags
Don’t freak out if you see a red flag on your credit report. There are steps you can take to address it:
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Review your full reports from Equifax, Experian, and TransUnion to identify all flags and their underlying causes.
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Dispute any inaccurate information with details and evidence to get unverified or incorrect data removed.
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Prioritize paying down account balances to lower credit utilization and reduce risk factors.
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Continue making on-time payments to establish positive payment patterns and offset negative marks.
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Limit new credit applications while your report has flags to avoid racking up excessive hard inquiries.
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Contact your lenders and explain any complex credit situations that led to delinquencies or flags appearing.
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Write goodwill letters asking lenders to remove flags for resolved past credit issues.
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Wait for flags to expire – most negative credit flags remain for 7 years then automatically drop off your report.
With a patient, proactive approach, you can have flags removed or minimized so they have less impact on your finances going forward. Monitoring your credit and maintaining responsible habits helps avoid new flags in the future.
Frequently Asked Questions
How long do flags stay on your credit report?
Most negative credit flags remain on your report for 7 years from the date of the initial delinquency before automatically expiring. Some flags expire earlier, while a completed Chapter 13 bankruptcy can stick on your report for up to 10 years.
Can you remove a flag from your credit report?
You can request removal of inaccurate flags that you successfully dispute with evidence. Flags related to past credit issues may get removed if you get a lender to approve a goodwill deletion. But negative flags based on true reporting generally remain for the full 7-year period.
Do credit report flags affect your credit score?
Flags themselves don’t directly reduce your scores, but many underscore serious credit issues that can significantly lower your scores like collections, late payments, and high balances. Resolving those underlying problems helps lessen their credit score impact over time.
What is the difference between a fraud alert and credit freeze?
A fraud alert flags your account as potentially compromised, while allowing creditors to issue credit after identity verification. A freeze restricts creditors from accessing your report at all without a special PIN, preventing new accounts until you lift the freeze.
Can too many credit inquiries trigger a flag?
Yes, applying for numerous credit accounts in a short period can prompt lenders to flag your report for credit shopping risk. Try to space out applications and only apply for credit you need.
The Bottom Line
Finding a flag on your credit report can be concerning but isn’t necessarily catastrophic. Now that you understand what flags mean and how to address them properly, you can take action to remove or minimize any negative impacts they cause. With diligent credit monitoring and responsible financial habits, flags should become less of an obstacle over time.
What you need to know
You must be 18 to create a myEquifax™ account.
Visit Customer Care to learn how to submit requests by phone or mail.
Please note: In order to place a fraud alert, you will need to have an active Equifax credit report on file.
A fraud alert is a notice on your credit report that alerts creditors you are or may be a victim of fraud, including identity theft. A fraud alert can make it harder for someone to open unauthorized accounts in your name. It encourages or requires lenders and creditors to take extra steps to verify your identity, such as contacting you by phone, before opening a new credit account in your name or making changes to existing accounts.
There are two types of fraud alerts you can place on your credit report, and both are free.
- Initial fraud alert – If you believe you are or may become a victim of fraud or identity theft, you may place an initial fraud alert on your credit report. An initial fraud alert remains on your credit report for one year, unless you choose to remove it sooner, and can be renewed for additional one-year periods. An initial fraud alert also allows you to request an additional free copy of your credit reports from the three nationwide credit bureaus during the 12-month period following the placement of the initial fraud alert.
- Extended fraud alert – If you have a police report showing you’re a victim of identity theft, you may place an extended fraud alert on your credit report. An extended fraud alert remains on your credit report for seven years unless you choose to remove it sooner. An extended fraud alert also allows you to request two free credit reports from the three nationwide credit bureaus during the 12-month period following the placement of the extended fraud alert, and your name is removed from pre-screened credit card and insurance offers for 5 years.
You can contact any of the three nationwide credit bureaus to request a fraud alert. Once you have placed a fraud alert on your credit report with one of the bureaus, that bureau will send a request to the other two bureaus to do the same, so you do not have to contact all three.
To place an initial one-year fraud alert, create or sign in to a myEquifax account, or call our automated line at 888-836-6351. You can also place an initial fraud alert by mail by downloading and following the instructions on the Alert Request form.
To place an extended seven-year fraud alert, download and follow the instructions on the Extended Fraud Alert Request form. You’ll need to include additional documentation showing you’re a victim of identity theft.
Visit our FAQs to learn more about Security Freezes & Fraud Alerts.
An active duty alert is available for service members on active military duty who want to help minimize their risk of fraud or identity theft while deployed. An active duty alert is similar to initial fraud alerts; they can make it harder for someone to open unauthorized accounts in your name. It encourages lenders and creditors to take extra steps to verify your identity, such as contacting you by phone, before taking certain actions, such as opening a new credit account in your name or increasing your credit limit.
An active duty alert is free and lasts for one year, and your name is removed from pre-screened credit card and insurance offers for two years. You can contact any of the three nationwide credit bureaus to request an active duty alert. Once you have placed an active duty alert on your credit report with one of the bureaus, that bureau will send a request to the other two bureaus to do the same, so you do not have to contact all three.
To place an active duty alert, create or sign in to a myEquifax account, or call our automated line at 888-836-6351. You can also place an active duty alert by mail by downloading and following the instructions on the Alert Request form.
A fraud alert, a credit report lock, and a security freeze are all steps you can take to help better protect your personal information, but they aren’t the same thing.
A fraud alert is a notice that is placed on your credit report that alerts credit card companies and others who may extend you credit that you may have been a victim of fraud, including identity theft. Think of it as a “red flag” that encourages companies to take steps to verify your identity before extending credit in your name.
You may contact any of the three nationwide credit bureaus — Equifax, Experian, and TransUnion — to request a fraud alert. Once you place an alert with one of the bureaus, that bureau will send your request to the other two bureaus.
Fraud alerts are free, and there are two types:
- An initial fraud alert can be placed if you believe you are or may become a victim of fraud or identity theft. It lasts for one year and can be renewed. When you or someone else attempts to open an account in your name or make changes on an existing account, such as increasing the credit limit, the company must take reasonable steps to confirm you are who you say you are, such as contacting you by phone at a number you provide, before completing the request.
- An extended fraud alert can be placed if you are a victim of fraud or identity theft. It requires a copy of a valid police or law enforcement agency report, or a Federal Trade Commission Identity Theft Report, and lasts for 7 years. With an extended fraud alert, a lender or creditor is required to verify your identity in person or by phone at a number you provide before opening new accounts or making changes to existing accounts.
If you are on active military duty and want to help minimize your risk of fraud or identity theft while you are deployed, an active duty alert is available to you. The active duty alert is similar to an initial fraud alert: it also lasts a year, and companies must take reasonable steps to verify your identity before opening new accounts in your name or modifying existing ones.
A credit report lock and a security freeze both generally prevent access to your Equifax credit report to open new credit accounts. Unless you temporarily lift or permanently remove a freeze, or unlock your credit report, it can’t be accessed to open new accounts (subject to certain exceptions). Because these functions have the same impact, you cannot add both a freeze and a lock to your Equifax credit report. See more about exceptions below.
- Security freezes (also known as credit freezes) are federally regulated and allow you to place, temporarily lift, or permanently remove a freeze. At Equifax, you can manage your freeze online with your username and password after creating a myEquifax account. You can also manage your freeze by phone: Call us at (888) 298-0045. You’ll be required to give certain information to verify your identity. You’ll also have the option to receive a one-time PIN by text message or answer questions based on information in your Equifax credit report for identity verification. Placing, lifting and removing a security freeze is free.
- Credit report locks are mobile app-enabled and allow you to lock and unlock your Equifax credit report using identity verification techniques such as usernames and passwords.
Placing a security freeze on your Equifax credit report will prevent access to it by certain third parties. Freezing your Equifax credit report will not prevent access to your credit report at any other credit reporting agency.
Exceptions: Locking or freezing your Equifax credit report will prevent access to it by certain third parties. Locking or freezing your Equifax credit report will not prevent access to your credit report at any other credit bureau. Entities that may still have access to your Equifax credit report include:
- Companies like Equifax Consumer Services LLC, which provide you with access to your credit score or report, or monitor your credit report as part of a subscription or similar service;
- Companies that provide you with a copy of your credit score or report, upon your request;
- Federal, state, and local government agencies and courts in certain circumstances;
- Companies using the information in connection with the underwriting of insurance, or for employment, tenant or background screening purposes;
- Companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe;
- Companies that authenticate a consumer’s identity for purposes other than granting credit, or for investigating or preventing actual or potential fraud; and
- Companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com.
Equifax maintains consumers’ credit reports and provides information to certain customers, including credit card companies and lenders, so that they may offer pre-approved offers to consumers as permitted by law. Consumers that prefer not to receive such offers should visit www.optoutprescreen.com, or call toll free at 1-888-5-OPT OUT (or 1-888-567-8688). Consumers may also send an opt-out request in writing to Equifax Information Services LLC, P.O. Box 740123, Atlanta, GA 30374-0123. Consumers should include their complete name, full address, Social Security number, and signature. Equifax will remove the consumer’s name from its pre-approved offer database and share the request with the other two nationwide consumer reporting agencies. How fraud alerts may help better protect your identity
7 Things To Know About Fraud Alerts When you’ve been a victim of identity theft, it’s tough to know what to do first. Do you know what fraud alerts do, what types are available, or how fraud alerts work?
