Credit Freeze vs. Credit Lock: What’s the Difference?
Credit freezes and credit locks are often confused for one another since they protect consumers’ credit files from fraud in similar ways. They are, however, two different actions. As more people take preventative measures to protect their identity, it’s important to know how each of these actions will protect you and the difference between the two.
In short, credit freezes and credit locks serve similar functions – they restrict access to your credit file so that fraudsters can’t open phony lines of credit in your name. There are pros and cons to both, and the main differences are cost, convenience, level of protection, and legal recourse.
What is a Credit Freeze?
Credit freezes block credit companies or any other lenders from viewing your credit report.
That way, if someone has obtained your information and tries to open a line of credit or get a loan fraudulently in your name, when the creditor goes to check if the fraudster (posing as you) is qualified, the creditor won’t be able to view your credit file. Without this information, the creditor will reject the loan or credit line.
As of Sept. 21, 2018, it is federally mandated that credit freezes be free for all American consumers. This decision was made to combat the rising levels of fraud and identity theft over recent years.
How to freeze your credit:
To freeze your credit file with all three major credit bureaus – Equifax®, Experian®, and TransUnion® – you must contact each one individually and make the request. You can do so online, by phone, or by mail.
You’ll need your personal information to prove your identity, including:
- Full name
- Date of birth
- Social Security number
Once you’ve proven your identity and put the freeze in place, your credit file is not available to lenders unless you lift the freeze. You’ll receive a PIN that allows you to do so either temporarily or permanently so that you’re able to “thaw” your file and open new credit accounts as needed.
How to unfreeze your credit:
To unfreeze your credit, reach out to the bureau or bureaus you placed freezes with. You’ll need to provide your PIN number to Experian® directly, but with TransUnion® and Equifax®, you’ll sign into the account you created when you froze your credit. There, you’ll be able to lift the freeze online.
While credit freezes have historically been used by active victims of identity theft, more and more Americans are freezing their credit as a preventative measure. This is largely due to the rising number of identity theft victims and increased frequency of data breaches.
Pros and cons of a credit freeze:
A credit freeze is a highly recommended way of protecting your credit file from fraud. However, depending on the situation, some people may prefer to go another route.
- Credit freezes will prevent fraudulent new credit accounts from being opened in your name.
- Credit freezes are mandated by federal law, and the terms and conditions are static.
- Credit freezes are required to be free to all American consumers.
- A credit freeze does not guarantee safety from identity theft. If someone has access to information pertaining to your accounts that are already established, they could still perform fraudulent activity.
- If you need to open a new line of credit, you’ll be required to contact all bureaus separately and provide your PIN to lift the freeze temporarily – this can take up to one hour if the request is made online or by phone and up to three business days if done by mail.
- If you forget your pin, you’ll need to verify your identity again with Equifax and TransUnion and will have to wait for a new pin to be delivered by mail with Experian.
What is a Credit Lock?
Credit locks also restrict access to your credit file the same way that a freeze does. But unlike freezes, which are federally mandated, credit locks are a service that each of the three major bureaus offers independently.
The draw of a credit lock over a credit freeze is that it’s more convenient to lock and unlock your file as needed by simply using on app on your phone. That way, when a legitimate credit check is needed, you have the power to unlock it.
The catch is that since credit locks aren’t federally mandated or regulated the way freezes are, they are not free. And like freezes, you’ll want to lock your file with all three bureaus for adequate protection.
Additionally, two of the three bureaus require that upon signing up for the service, you agree to not sue or join any class-action lawsuits against them.
How to lock your credit:
Like a freeze, to lock and unlock your credit you’ll need to sign up for at least one, but preferably all three for sufficient protection, of the three major credit bureaus’ credit lock services.
How to unlock your credit:
You’ll need to provide your PIN to all three credit bureaus. If you’re lifting your credit lock via mail or phone, you’ll also need your password and other personal information in addition to your PIN in order to verify your identity.
Pros and cons of locking your credit:
Unlike credit freezes, credit locks are a voluntary service that the credit bureaus offer, so they aren’t necessarily free. For some people, however, the convenience and speed of credit locks are preferable.
- A credit lock may protect your identity by preventing new accounts from being opened in your name fraudulently – just like a credit freeze.
- Credit locks are more convenient than freezes when it comes to locking and unlocking them, allowing you to do it instantly with an app on your phone. Password recovery is an easier process than obtaining a new PIN.
- You can get your credit locked with two out of the three bureaus at no cost.
- Like credit freezes, a credit lock in itself might only protect you from new accounts being fraudulently opened in your name.
- As a voluntary service provided by the credit bureaus, credit locks are not regulated in the same way that credit freezes are, which leaves less legal recourse for consumers.
- If you lock your credit file with all three bureaus, you’ll be stuck with the monthly fee from Experian® and the targeted marketing emails that you’ve opted into to lock your credit with TransUnion.
There are positives and negatives to credit freezes and credit locks alike, but both are positive measures that help to prevent fraudulent financial activity from taking place in your name.
However, a credit freeze and credit lock aren’t all you should be doing to protect your identity. Identity theft protection are essential as well. For more information on credit and identity theft monitoring, see how IdentityIQ can protect you.