Credit Freeze vs Lock: What’s The Difference?

Posted on April 13, 2021 in Credit Cards

A credit freeze and a credit lock are two ways that you can protect your credit report from being used by scammers trying to open new accounts. While you may see the terms being used interchangeably, they are actually different in a few key ways. However, they do both provide similar protections so it’s understandable where the confusion may come from. 

Credit lock and credit freezes are both tools that are used to help prevent criminals from hijacking your credit history for identity theft or other various forms of credit fraud. Applying either a credit freeze or a credit lock at one of the national credit bureaus will block all access to your credit file, preventing credit checks that are typically the first step in processing applications for loans or credit cards. While a credit freeze or credit lock may be a wise idea if you’ve been victimized by an identity thief or know that your personal data has been stolen, there are some cases where using a fraud alert is the better choice.

What Is A Credit Freeze?

A credit freeze will help you to protect your credit report. It’s a very smart option in the event that you are a victim of identity theft or believe that your private information may have been compromised. 

Federal law allows you to activate and remove a credit freeze on your credit report from each credit bureau for no cost. In order to block all access to your credit history using credit freezes, you must specifically request a separate freeze from each of the three national credit reporting agencies (Experian, TransUnion, Equifax). 

Once you have placed a security freeze on your credit report, the credit bureau will provide you with, or allow you to set up, a PIN or password to use when wishing 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 said freeze within one hour of receiving a request to do so when accompanied by the corresponding PIN or password. In the event that you lose your PIN or forget your password, you can request a reset from the respective credit bureau, but the one hour time limit will no longer be applicable. 

A credit freeze will be effective at thwarting unauthorized access to your credit file, but they will also block authorized access to credit information as well. Since they will prevent lenders from checking your credit, you will need to “thaw” your credit freezes before applying for a loan or credit card. 

What Is A Credit Lock?

Similar to a credit freeze, a credit lock will block all access to your credit report, but you will be able to activate it and disable it instantly via a dedicated mobile phone app or secure website. This option is more of a preventative measure to protect your information, but can be useful in the event of your information being compromised as well. 

There is no delay of 24 hours when locking your credit, nor is there a delay of up to an hour when unlocking it, as are the cases with a credit freeze. However, unlike the credit freeze, credit locks are not governed by federal law. Service agreements for each bureau will make it clear that the companies do not guarantee error free operations or uninterrupted service. As with a credit freeze, a credit lock is most effective when signing up for it at all three bureaus. Each bureau offers a slightly different version of a credit lock, so be sure you know what you are signing up for before agreeing to anything. Some of the differences include:

  • Equifax has a free credit lock program called Lock & Alert. The company claims that it is a free service for life. The terms of service do not include an arbitration clause or class action lawsuit waiver, meaning that you will not be required to sign away your option to sue or join in on a lawsuit.

  • Experian bundles in its credit lock with other services. The least expensive option is called IdentityWorks Plus and costs $9.99 a month, but includes a credit lock, identity theft insurance, and alerts when any information changes on your report across all three bureaus. Its terms of service will include an arbitration clause and class action waiver.

  • TransUnion offers a free product, which is administered under TransUnion’s TrueIdentity brand, offers the lock and unlock option along with other features, but the service agreement does include an arbitration clause and class action waiver. It will also require users to agree to receive targeted marketing materials. 

Each credit bureau will require you to provide proof of your identity when setting up a credit lock. You can submit the necessary documents electronically or mail them in hard copies. The security benefits of a credit lock will be identical to those for a credit freeze, and the limitations on access to your credit will be the same as well. No criminal access to your credit file will be possible, but neither will any legitimate access be granted either. 

Having the ability to activate and deactivate a credit lock instantly, without the time delays required for a credit freeze, can make the application process much easier and considerably more convenient than a credit freeze. However, you may want to consider another option: a fraud alert.

What Is A Fraud Alert?

A less severe alternative to credit freezer and credit locks is another free option known as a fraud alert. These will allow lenders to see your credit file, but it will require verification of your identity before any credit application is processed or any new account is opened up under your name. There are three different types of fraud alert available:

  • Initial fraud alert. While all versions of fraud alerts are free, only the most basic one of them, known as an initial or temporary alert, can be set up by anyone, anytime, and for any reason. You may choose to place a temporary fraud alert if you suspect that your personal information may have been compromised but haven’t confirmed it yet, if your credit card goes missing, or if you discover unusual activity on a credit card or bank account but are unsure if it’s criminal or not. A temporary fraud alert will last one year, but can be renewed indefinitely.

  • Active duty fraud alert. This type of a fraud alert will also last for one year, but is designed specifically for use by members of the United States armed forces when they are on assignment away from home.

  • Extended fraud alert. This alert will last for seven years and will require you to submit a copy of a fraud report that you supplied to a law enforcement agency.

While all three types of fraud alerts are lifted automatically upon expiration, you can remove one anytime before the expiration date upon request, just as you may discontinue a credit freeze or credit lock. 

Other Ways To Reduce Your Risk

Putting a freeze, lock, or fraud alert on your credit report is just one way to reduce your risk of identity theft. Going forward, you should frequently monitor your credit reports from all three of the major consumer credit bureaus for all suspicious activity or incorrect reporting. Other ways to reduce your risk for identity theft include:

  • Not giving out more personal information than absolutely necessary. Whenever you are filling out a document, never give any information that is not required, especially your Social Security number. Leave that line blank if possible, and only give out that information if there is a legitimate need.

  • Maintain strong passwords. You should use different usernames and strong passwords for every account that you have. While it may be easier and more convenient to use the same username and password so that you don’t forget them, it will only take one account being compromised for an identity theft to access all of your accounts. 

The Takeaway

A credit freeze is a good option for anyone that thinks their credit report and personal data may have been exposed. A credit lock is more of a preventive measure to guard your credit report and personal data from an identity thief. 

If you think that your personal data may have been compromised then it’s best to call up the three credit bureaus and freeze your account. Once the issue has been resolved, you should unfreeze your report and place a credit lock on it to decrease your chances of being a victim of identity theft again. Make sure you are guarding your personal information as best as you can and using different usernames and passwords for all accounts. 

SOURCES:

https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs

https://www.experian.com/blogs/ask-experian/whats-the-difference-between-credit-freeze-and-a-credit-lock/

https://www.equifax.com/personal/education/identity-theft/7-things-to-know-about-fraud-alerts/#:~:text=A%20fraud%20alert%20is%20a,Fraud%20alerts%20are%20free.

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