Did you know that according to the FTC American consumers reported being defrauded nearly 8.8 billion dollars in 2023? That comes after the startling statistic that one in ten adults will fall victim to a financial scam or fraud every year. This means that it’s more important than ever to protect both your personal and ecommerce business credit.
To ensure that your business doesn’t fall victim to this type of fraud it’s important you know how to defend your ecommerce business credit from falling into the wrong hands. One great place to start is by learning how to enact a credit lock, credit freeze, or fraud alert to prevent identity theft and keep your scores in good standing.
Credit Lock, Credit Freeze, or Fraud Alert
Many people use the terms credit lock, credit freeze, and fraud alert interchangeably, but there are subtle and important differences between the three. Both a credit lock and credit freeze effectively hide your business’ credit history from lenders and creditors. Fraud alerts, on the other hand, don’t hide your credit history but alert lenders that they may be dealing with scammers.
All three options help block thieves from trying to open a new account or take out loans in the name of your business, because no one can pull your credit history.
A credit lock prevents creditors and lenders from accessing your ecommerce business credit history by instantly locking your credit file from a mobile device or computer. This is an incredibly quick and convenient way to protect your ecommerce business credit, but it can be expensive to pay for identity theft protection tools or a credit lock service from the credit bureaus.
A credit freeze also prevents your credit history from being accessed by creditors or lenders, but is done by making a rest with each of the three major credit bureaus: TransUnion, Experian, and Equifax. This is a very cost-effective method for protecting your ecommerce business credit as it’s totally free, but it can take anywhere from a few hours to a couple business days to lock or unlock your credit.
A fraud alert statement is a note made on your ecommerce business credit report that will be viewed by creditors and lenders when they review your report. The note advises lenders to contact you, the business owner, before extending new lines of business credit so that you can confirm it’s not a fraudulent application. To place a fraud alert on your business credit report, you must follow the steps laid out by each of the three major credit bureaus (TransUnion, Experian, and Equifax) typically including a signature from the company’s business owner. Once this process is complete, the credit bureaus will add the fraud alert statement to your business credit reports.
It’s important to note that neither credit lock or credit freeze can stop scammers from accessing your current accounts. If they’ve already gained access to your credit, business bank account, or other financial information, it’s time to consider fraud protection services. Your ecommerce business credit’s health is a large contributing factor in the health of your business. Make sure that you’re taking steps to protect yourself and your business actively.