Credit Lock vs. Credit Freeze
What is the difference between a credit lock and a credit freeze?
You might have heard about these terms, credit freeze and credit lock. You’ve probably read them online or have seen them on television. They are gaining popularity, especially after recent news about data breaches, identity theft, and fraudulent activities.
A credit lock is a new credit protection service by three major credit reporting agencies: Equifax, Experian, and TransUnion, that is being marketed as a new way to protect your credit. Is it better than a credit freeze – the older, more established method of locking access to your credit?
Another thing is, are you confused about what the difference between a credit lock and a credit freeze is? No need to worry anymore because the unbiased explanation is right here.
How Is a Credit Freeze Defined?
The Federal Trade Commission (FTC) describes a credit freeze on its website as a tool that “severely limits access to your credit file, making it much harder for identity thieves to establish new accounts in your name.”
Lenders require credit reports to evaluate your eligibility for a new line of credit. On the other hand, criminals may impersonate you, and lenders having access to your credit records might result in identity theft. No one can access your credit reports when you put a credit freeze, which means that a lender cannot approve a loan or credit card in your name.
A credit freeze does not affect your credit score.
It does not exclude you from establishing a new account or engaging in other activities such as seeking a job or renting a house indefinitely. However, if you want to open a new line of credit, you’ll need to remove the freeze for a specified amount of time temporarily.
A credit freeze does not exclude you from obtaining your free yearly credit report.
This does not prevent a fraud from gaining access to your current bank accounts, which means you must continue to watch them.
What is the definition of a credit lock?
Credit locks are another method to safeguard your credit. As with a freeze, it prevents anybody from opening a new account in your name.
- Credit locks have no impact on your credit score.
- It may require monthly charges.
- It does not exclude you from obtaining your free yearly credit report.
- It does not prevent anyone from gaining access to your current bank accounts, which means you must continue to watch them.
- You must file credit reports with all credit reporting agencies.
Credit freeze versus credit lock.
Credit freezes and credit locks are tools that let you restrict access to your credit reports. They both block potential lenders from accessing your report.
Many people choose to freeze their credit reports to prevent new accounts from appearing on their reports. For example, if you apply for a new credit card, the lender can see that account in your credit report, but it will not affect your credit score until you make the first payment
Credit freezes and credit locks are mutually inclusive, however, in different ways.
- A credit freeze locks your credit reports so that no new accounts can appear. This prevents lenders from seeing your credit score, so they can’t approve you for new credit without contacting you first.
- However, credit freezes don’t prevent lenders from seeing your existing accounts so that those accounts will remain visible on your credit reports.
- A credit lock freezes your credit reports but also blocks lenders from opening new accounts. This protects your existing accounts but prevents your credit score from being affected.
- A credit freeze and a credit lock both work this way: You contact one of the three credit bureaus and demand that they place a freeze on your credit file — a process you’ll only do once because you’ll put the same freeze on all of your credit reports.
- Credit freezes are free. You’ll need to request that a credit freeze be placed on all three of your credit reports, but you can do so by calling 877-567-8688 or visiting equifax.com.
- Credit locks cost $10 to $15 per year or $50 to $70 for a lifetime membership. You pay the fee to each of the three credit bureaus, but you can save money by placing the same lock on all of your files at once.
Comparison between a credit lock and credit freeze.
|Credit Lock||Credit Freeze|
|Your credit information is protected||Ensures prevention from unauthorized access to your credit information and the establishment of new credit in your name|
|Typically, it is a fee-based service involving anti-fraud businesses and two of the three main credit agencies.||With all three bureaus, it is free.|
|Bureaus Credit and paid anti-fraud firms operate these systems.||Bureaus Credit alone is responsible for administration.|
|Governed solely by the policies of the individual businesses||Federal legislation applies|
|It is unclear who is liable for any damages.||Legal protection for losses|
How a Credit Freeze Is Performed
Contact each of the three leading credit reporting agencies—Equifax, Experian, and TransUnion—to freeze your credit history. Each will need specific information, such as identification, before freezing your credit report. The procedure is straightforward and should take no more than an hour to complete for all three major credit bureaus.
You may either permanently or temporarily lift a freeze. And permanently deleting one does not imply that you may reinstall it afterward. According to industry terminology, the action is called a “thaw”,—and it is entirely free. You may lift a freeze online or via written communication with each of the three credit reporting agencies separately.
Why freeze credit instead of locking credit?
Keep in mind that credit freezes are different from credit locks. A credit freeze prevents anyone from accessing your credit report and scoring information, including lenders. A credit lock does the opposite and allows users to open new accounts.
A credit freeze is a more permanent option, and it’s better. When you take for a loan, the lender must check with a credit bureau. When you apply for a credit lock, the lender must confirm your identity.
Freezing your credit is a more fixed solution, and it’s better. When you take for a loan, the lender must check with a credit bureau. When you apply for a credit lock, the lender must confirm your identity.
If you’re concerned about identity theft, a credit freeze is the better choice. A credit lock gives you some protection against identity theft, but it’s only as good as your PIN. Your PIN is easier to misplace, and it’s easy to break. A credit freeze, for instance, is nearly impossible to break.
Another advantage credit freezes have over credit locks is that you can usually freeze your credit once. Credit locks must be renewed regularly, which can be difficult.
If you’re unsure which best solution is for you, seek advice from a bankruptcy attorney.
What are the benefits of a credit freeze?
Credit freezes are free, and people in every state can use one. If you’ve never had one and are considering freezing your credit, here are five major benefits:
Credit freezes are the closest thing to “digital locks” that exist today. When you freeze your credit, nobody can open new accounts in your name without your express permission. That means if someone tries to open an account in your name, you’ll be notified by email or text message.
When you freeze your credit, nobody can open new accounts in your name without your consent. (They can, however, unfreeze your credit temporarily if they think you’re a victim of identity theft.)
That means that if someone applies for a credit card in your name, and the lender doesn’t find a record of you, they can’t approve the application.
Peace of mind.
When you freeze your credit, no one can open new accounts in your name without your consent. (They can, however, unfreeze your credit temporarily if they want to check your credit report.)
That means you can enjoy the peace of mind that comes with knowing that no potentially damaging accounts can materialize out of nowhere.
Freezing your credit makes it even more difficult for identity thieves to open a new account in your name.
Once you’ve frozen your credit, you don’t have to do anything to keep it from freezing again. Just thaw your credit when you need it.
If you aren’t sure which option is right for you, seek advice from a Portland bankruptcy attorney.
Talk to a reliable bankruptcy attorney in Oregon today!
Credit lock vs. credit freeze – which one is right for you? It’s essential to weigh the pros and cons of each option. A lock will prevent new lines of credit from being opened in your name without a password. On the other hand, a freeze protects your bank account against fraudsters opening fraudulent accounts using your personal information.
If you aren’t sure which plan or option is best for you or want more guidance on protecting yourself from identity theft when filing bankruptcy protection, don’t hesitate to contact our Oregon bankruptcy law firm! We’ll help answer any questions that come up along the way.
Our Oregon Attorneys are here to help!