When Should You Lock or Freeze Your Credit?
Have you been worried about identity theft? If so, you might have looked into locking or freezing your credit. But, do you know the difference?
A credit lock and credit freeze generally do the same thing: they prevent anyone from opening credit in your name. But, there are also differences between these options.
Credit Lock Definition
All three major credit bureaus give consumers the option to lock their credit report.
When you do this, a lender can’t get access to it to approve any loan or line of credit. However, keep in mind that this is an agreement between you and the credit bureau. To make it effective, you have to do it with all three bureaus.
Credit Freeze Definition
A credit freeze does a similar thing. It freezes your credit report so that lenders cannot access it. A credit freeze is also guaranteed by law.
What’s the Big Difference?
So, what’s the difference? Well, the big difference comes from how a lock and freeze operate.
When you do a credit freeze, which is generally convenient and affordable, you go through a series of different steps, online, by phone, or through the mail. You can lift the freeze at any time when you want to legitimately apply for credit. And you can set the freeze to automatically refreeze on a specific date.
With any lift, you must provide a PIN number. Also, keep in mind that there are usually fees to freeze and lift the freeze, and you might have to go through a waiting period or a few hours.
Are They Convenient?
Though some say a credit freeze is more convenient than a credit lock, there is still time that must pass before it’s effective. Generally, this is from 2 to 24 hours. When the freeze is initially initiated, you will get a PIN number. You must retain this PIN in your records and enter it to lift the freeze, and you must ask each credit bureau to unfreeze your report.
A credit lock does not have a PIN. You generally initiate a lock by using a secure app on your phone (which itself has a PIN). It occurs immediately through TransUnion and Experian. With Equifax, it takes from 2 to 48 hours, which is essentially the same as a freeze. Also, keep in mind that you cannot freeze and lock your accounts at the same time. You have to choose one or the other.
You probably want to think about cost, too. It’s worth it to mention that Equifax and TransUnion both offer free products to lock your credit down. But, remember, with a credit lock, you must lock your credit through each bureau. It won’t help much if you are locked up in two, but the third is open to anyone.
Equifax has a brand-new credit lock in place, and it seems to be different than what the company offered previously. Equifax operates its credit lock through its TrustedID Premier service, which helps protect consumers from identity theft. This service offers fraud alerts, credit monitoring, and other features.
Experian has a similar product that is subscription based. It is called CreditLock, and it’s available through the company’s CreditWorks service. It is $5 for the first month and then costs $25 for later months.
A credit lock is another term for an identity theft protection service.
Credit freezes aren’t free, either. But, the cost of freezing and then lifting your freeze is usually cheaper than paying a monthly fee to keep your credit locked. In fact, federally, the cost to freeze and unfreeze your credit is set at $10, but many states have made it the law that it’s even cheaper than that.
The one reason you might consider a lock with Experian is that the system checks your credit each day, and it immediately alerts you if there is any instance of someone trying to check your credit.
This might sound like an awesome deal and worth the $25…but, it might not be. Many experts don’t recommend that you pay for credit monitoring because you can usually do the same thing for free through your credit card company or other financial account service.
That’s definitely something to think about before you start shelling out cash for a credit lock. A credit freeze will be just fine if you want protection, and it costs less.