Many people are aware of the number of data breaches and scams today and want to feel reassured that they are protected from identity theft and other forms of credit card fraud.
If you are among their ranks, you might benefit from a credit freeze, which is typically free, or credit lock, which may involve a fee. Both of these processes block access to your credit file. This can prevent credit checks that may be the first step in unauthorized applications for a new loan or credit card.
It can be a wise idea to apply for a credit lock or credit freeze at one or all three of the major credit bureaus if you are dealing with a data breach or identity theft.
Learn the pros and cons of a credit freeze vs. lock here, as well as when what’s known as a fraud alert might provide the right level of protection.
Key Points
• A credit freeze is a free service that blocks access to your credit report, making it harder for identity thieves to open new accounts in your name.
• Credit locks also block access to credit reports but typically require a subscription fee and allow for instant activation and deactivation via an app.
• Both credit freezes and locks prevent unauthorized access to credit files but differ in terms of ease of use and the potential for legal protections.
• A fraud alert is a less severe option that allows lenders to see your credit report but requires verification of identity before processing new credit applications.
• Regular monitoring of financial accounts is essential, regardless of whether a credit freeze, lock, or fraud alert is in place, to catch any fraudulent activity promptly.
What Does a Credit Freeze Do?
A credit freeze (also known as a security freeze) is a free tool that allows you to block all access to your credit report and makes it tougher for identity thieves to open new accounts in your name.
That’s because nearly all creditors want to see your credit report before they approve an account and extend credit to you.
If they can’t access your credit report, it’s unlikely that you will get approved. That works in your favor when someone other than you is trying to open an account in your name and perhaps commit identity theft.
Fortunately, according to the Federal Trade Commission (FTC), freezing your credit will not harm your credit score, nor will it impair your ability to get your free annual credit report.
A credit freeze also won’t limit your ability to open new accounts. However, because credit freezes prevent lenders from checking your credit, you will need to lift the freeze temporarily before applying for a loan or credit account, and then place the freeze again when you are done accessing your account.
In addition, freezing your credit won’t hurt your ability to apply for a job, rent an apartment, or, say, buy insurance for your family. According to the FTC, the freeze doesn’t apply to those actions.
It’s important to keep in mind, however, that a freeze won’t prevent a thief from making charges to your existing accounts.
For that reason, you will still need to stay on top of your finances and monitor all of your bank, credit card, and insurance transactions carefully for fraudulent transactions.
You may also want to be aware that, even with a freeze, certain entities will still have access to your credit report.
These include your existing creditors, debt collectors acting on their behalf, and government agencies who need to have access in response to a court order.
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How to Freeze Your Credit On Your Own
Putting a freeze in place simply requires contacting each of the nationwide credit bureaus, which include:
• Equifax
• Experian
• TransUnion
You will need to supply your name, address, Social Security number, date of birth, along with some other personal information.
After receiving your freeze request, the credit bureaus will give you a PIN (personal identification number) or password. You’ll want to keep this in a safe place since you will need it whenever you choose to lift the freeze.
By law, credit bureaus must activate a credit freeze within 24 hours of receiving a request by phone or online, and they must lift a freeze within one hour of receiving a request to do so accompanied by your PIN or password.
Your freeze will remain in place until you temporarily lift or completely remove it (more on how to do that below). In some states, a freeze lasts indefinitely; in others, up to seven years.
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How to Lock Your Credit Report
If you’re wondering about a credit freeze vs. a credit lock, here’s more intel. Like a credit freeze, a credit lock blocks access to your credit report but won’t harm your credit score.
Like a freeze, to be fully protected, you must place locks with all three credit reporting agencies. However, it may offer lesser legal protection if you do encounter an issue.
With locks, however, there’s no PIN, and usually, there is no delay of up to 24 hours when locking your credit file, nor a delay of up to an hour for unlocking it.
With a credit lock, you can activate and disable it instantly via a smartphone app or secure website.
Locking your credit involves enrolling in one (or all) of the programs offered by the three major credit bureaus, Equifax, (Lock & Alert), Experian (CreditWorks), and TransUnion (TrueIdentity).
There is often a monthly fee involved in enrolling in one of these services. Credit locks, however, often come with additional services, such as monthly access to credit reports from all three bureaus, alerts when there’s new credit activity on your accounts at any of the three bureaus, identity theft insurance, and fraud resolution assistance.
Credit bureaus typically require you to provide proof of identity when you set up a credit lock. You can submit the necessary documents electronically or mail in hard copies.
The security benefits of a credit lock are the same as those for a credit freeze, and the limitations on access to your credit are the same as well–criminals won’t be able to access your credit file.
By the same token, new lenders whom you are legitimately working with to apply for loans or credit won’t be able to either unless you temporarily lift the block.
Unlike credit freezes, credit locks are not regulated by state law but are instead governed by a contract between you and the credit bureau.
Recommended: Guide to Blocked Credit Cards
How To Remove a Credit Freeze or a Credit Lock
If you want to lift or remove a freeze, you’ll need to call the credit bureau or visit the credit freeze page on its website, then use the PIN code or password you set up when you activated your credit freeze.
If you are lifting a freeze because you are applying for credit and you can find out which credit bureau the lender will contact for your credit file, you may be able to lift the freeze only at that particular credit bureau. Otherwise, you need to make the request with all three credit bureaus.
When you call or go online, you’ll likely have the option to thaw your credit temporarily (in which case, you will likely be issued a single-use PIN or password that you can provide to a creditor to access your frozen credit file), or to lift the freeze permanently.
Removing a credit lock, on the other hand, is typically just a matter of turning off a virtual switch online or in an app provided by the credit bureau.
When access to your credit file is no longer required, you can simply turn the switch back on.
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How Is a Credit Freeze or Lock Different from a Fraud Alert?
Now that you’ve learned about a credit lock vs. freeze, there’s another scenario to consider. If you are worried about catching credit card fraud and/or identity theft but haven’t yet become a victim, you might consider placing a fraud alert on your credit report, which is less severe than a credit freeze or lock.
Unlike a freeze or lock, which shuts down access to your credit information, a fraud alert allows lenders to see your credit file, but it requires verification of your identity before any credit application is processed or any new account is opened in your name.
For example, if you have a phone number in your credit file, the business must call you to verify whether you are the person making the credit request.
A fraud alert can make it harder for an identity thief to open more accounts in your name, and can be a good idea if your wallet, Social Security card, or other personal, financial or account information is ever lost or stolen.
To place a fraud alert you simply need to contact one of the credit bureaus. It will then put the alert on your credit report and tell the other two credit bureaus to do so.
A fraud alert is free, and the alert stays on your report for one year. It’s a good idea to mark your calendar, so you can then place a new fraud alert.
If you’ve been a victim of identity theft, credit bureaus often offer a free extended fraud alert that lasts for seven years.
Recommended: Types of Bank Fraud to Look Out For
The Takeaway
A credit freeze vs. a credit lock can each provide a layer of protection if you’re an identity theft victim or you have good reason to believe someone with criminal intent has accessed your information. Credit freezes and credit locks both restrict access to your credit reports. But you can turn a credit lock on and off instantly while adding or lifting a credit freeze requires making a request to the credit bureau.
Another key difference is that credit freezes are free, while credit locks are typically offered as part of paid services from the three national credit bureaus.
Whatever form of fraud protection you choose, it’s still important to stay on top of and regularly check all of your financial accounts.
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FAQ
Can I freeze my credit for free?
Yes, you can freeze your credit for free by contacting each of the three credit bureaus, Equifax, Experian, and TransUnion.
What’s the difference between a credit freeze vs. credit lock?
A credit freeze limits access to your credit reports, is free, and must be filed with each of the three credit bureaus. A credit lock can be a paid service, can be instantly turned on and off, and may in some cases provide a lesser degree of legal protection.
How long does a credit freeze vs. credit lock last?
A credit freeze lasts until you remove it or up to seven years in some states. A credit lock lasts as long as you subscribe to the service providing it.
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