How does a fraud alert benefit consumers?

A fraud alert benefits consumers primarily by acting as a warning to creditors about potential identity theft. When a consumer places a fraud alert on their credit report, it signals to lenders and creditors that there may be a risk that the individual is a victim of identity theft. This notification prompts creditors to take additional steps to verify the identity of the person applying for credit, such as making a phone call to confirm that the application is legitimate before processing it. This added layer of security helps to protect consumers from fraudulent accounts being opened in their names.

The other choices do not adequately capture the purpose and effect of a fraud alert. While it's true that a fraud alert may help prevent unauthorized access to credit, it does not directly impact credit scores or streamline loan approvals. Furthermore, it does not eliminate the need for ongoing credit monitoring, which remains important for consumers to detect any suspicious activity promptly.