Credit freezes and credit locks are tools that can help protect you from identity theft and various forms of credit fraud.
Both credit freezes and credit locks block all access to your credit file. This prevents credit checks that are often the first step in processing applications for loans or credit cards.
Applying for either a credit lock or credit freeze at one of the national credit bureaus can be a wise move if you’ve been victimized by an identity thief, or if you know your personal data has been stolen or compromised through a data breach.
Here are the pros and cons of each type of block, as well as when simply using a fraud alert may be a sufficient form of protection.
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.
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 buy insurance. 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.
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).
Ready for a Better Banking Experience?
Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!
How to Lock Your Credit Report
Like a credit freeze, a credit lock blocks all access to your credit report, and won’t harm your credit score.
Like a freeze, to be fully protected, you must place locks with all three credit reporting agencies.
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.
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.
How Is a Credit Freeze or Lock Different from a Fraud Alert?
If you are worried about 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.
The Takeaway
A credit freeze or a credit lock can 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.
The ability to activate and deactivate a credit lock instantly, without the time delays that come with the credit freeze process, can make the process easier.
If you’re looking for some fraud protection, but maybe not quite as much as a credit freeze or lock, you might want to simply place a fraud alert on your credit file instead.
Whatever form of fraud protection you choose, it’s still important to stay on top of and regularly check all of your financial accounts.
One way to make managing your money a little simpler is to sign up for SoFi Checking and Savings®.
SoFi Checking and Savings is an account that allows you to earn competitive interest, save, and spend all in one account. And, with SoFi Checking and Savings, you can track all your spending and save with a single dashboard.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC . SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOMN21023
