There are three main types of fear.
Shock. The main purpose of shock fear is to startle the observer.Example: A loud scream or sudden scary figure appearing out of a closet.
Paranoia. The purpose of paranoia is to make the observer feel nervous and unsure about his/her surroundings.Example: A story about ghosts makes you feel chills when you hear a floorboard creak.
Dread. The purpose of dread is to create such a suspense that the observer is overcome with a feeling of personal dread. A feeling that something bad will happen. This is perhaps the most powerful form of fear—the stuff of nightmares.Example: A horribly grotesque figure is rocking on the ground; you dread that it will look up at you.
Anonymity vs. Specifics
Anonymity. Using anonymous cities and people is often used by writers (namely inexperienced writers), who mistakenly think that the "not knowing" factor of it will be more likely to scare people. This is not always true; in fact, it can end up making your story more laughable. "One time in a little town there lived a kid who..." et cetera.
Specifics. Being specific can often be much more powerful than being vague. When people want to be scared, the idea that the story could be real is much more tantalizing than "it happened in the woods somewhere". Even if the place doesn't exist, clarifying where it happened, and to whom, can often make it far more unnerving.
How It Starts
Throw people right into the shit. This is usually not a good idea. A story beginning with "It's going to get nem this may be my last diary entry" is weak. Oh no, something is going to "get" someone I know nothing about, and do something to them maybe. The story could be about Anne Frank, or a grotesque kidnapper or some shit.
Lead them in. Start things off a bit normally, and slowly interject foreshadowing into the story. Give people the sense "things are not normal... something's not right here..." and so forth. If you can build the suspense high enough, people will feel paranoid, and maybe start feeling dread.
Building the Story
Subtlety. A little subtlety goes a long way. Reading about a gentle scratching on the window is a lot scarier than your window suddenly shattering. Seeing something out of the corner of your eye is scarier than opening your bedroom door and seeing a girl with no face on your bed. The beauty of subtlety is that you can make it lead into something more obvious.Example: Story starts with you seeing shit out of the corner of your eye, then it stops darting away so fast, and eventually you see the whole thing.
Don't drag it on. REALLY long stories either need to be incredibly well-written, or not written at all. The story needs to progress on, building on the terror the whole time. Not spending ten paragraphs reflecting on this one time you went to the store and saw a missing person's poster, and how you saw that poster at three other stores, but the name changed each time. That can be explained in a few sentences.
What Is Scary?
The unknown. Tap into something unexplained and seek to give it a terrifying, and semi-believable answer. Things with no known answer are great places to draw from, rather than something totally explainable in common language.
Science. By talking technically, you can fool people into believing its authenticity.
Children. A story about a child is scarier than one about an adult roughly 80% of the time. This is because children are usually viewed as innocent.
Mirrors. Mirrors have always been popular subjects of horror, and for a good reason. They allow us to see ourselves, but, as funhouse mirrors show us, things aren't always what they seem.
