Credit Lock vs Credit Freeze: What's the difference?
Table of Contents:
1. Difference Between Credit Lock And Credit Freeze.
4. Credit Freeze Vs Credit Lock
5. Credit Lock Vs Credit Freeze- How's It Helpful for Small Business Owners?
6. When Can Credit Freeze be Used?
7. When Can Credit Lock be Used?
8. Credit Freeze Vs Lock: Which One is a Better Choice?
1. Difference Between Credit Lock And Credit Freeze.
Are you worried thinking about scammers who can access your credit file without your permission? Scammers may easily open your credit file and start purchasing in your name, leaving you in debt in the credit reports. Some scammers might also open loans in your name and not pay them back, and that will show up in the credit reports. So, you need to know how to protect your credit reports. The best way to protect your credit report is by signing up for either a credit lock or a credit freeze.
2. What Is Credit Lock?
A credit lock is a way to restrict lenders from accessing credit reports. It enables you to lock and unlock your credit report through your mobile without having to remember the card PIN. If scammers unknowingly open a credit report account using your name, the credit lock will protect you. All the reputed credit bureaus will help you to know how to place a credit lock. With just a user ID and password, smartphone users can manage the credit lock through an app.
3. What Is A Credit Freeze?
A credit freeze is also known as a security freeze at no cost. Credit locks and credit freezes are similar, they prevent lenders from accessing an individual’s credit report without their consent. A credit freeze will restrict access to your credit report from scammers and help you identify any theft. It is a good option for every individual to freeze their credit reports. With this, lenders cannot access your credit reports until you permit three credit bureaus to unfreeze the reports. By using a personal identification number (PIN) or password, you can easily freeze and unfreeze your credit reports whenever you want.
4. Credit Freeze Vs Credit Lock
Credit lock and credit freeze are the preventive measures to protect credit report information. Though these two systems are similar, there are certain differences between a credit lock and a credit freeze. The fundamental differences between these two systems are mentioned below:-
Credit Lock | Credit Freeze |
It is protected by username and password. | It is protected by Personal Identification Number(PIN). |
Credit lock is chargeable. | Credit freeze is free. |
Credit lock is used as a preventive measure to safeguard a credit file. | Credit freeze is used when you get to know that all your personal information is being stolen by scammers. |
You can easily activate and deactivate credit locks online or by using an app on your smartphone with username and password. | To activate or deactivate credit freeze, first, you need to mail your request to credit bureaus. Then you have to call the credit bureaus or go online and follow all the procedures you have to generate a PIN to freeze or unfreeze your credit report. |
To lock and unlock credit reports is a simple process. | To freeze and unfreeze credit reports is complex, and it may take more steps and time. |
5. Credit Lock Vs Credit Freeze- How's It Helpful for Small Business Owners?
Small business owners always have to be careful regarding the protection of their credit reports. Credit lock and credit freeze are new technologies that are essential for all the finance industries. For all the small business owners, as their business grows, the necessity of protecting their credit reports from theft or scammers increases.
The owner of a small business industry can immediately freeze his credit if he finds himself a victim of a financial data breach. Once he freezes his credit, then scammers can never open an account in his name. Not only this, he can freeze his credit unless he applies for any type of loan or a new credit card. One important thing that every small business owner has to make sure of is that his credit freezes at all three credit bureaus.
6. When Can Credit Freeze be Used?
If you are using a credit card, you must be worried about when to use credit freeze. In the below-mentioned points, you will have an idea about when to use a credit freeze.
- If you are a victim of a data breach.
- You think you are a victim of identity theft.
- You are in high-risk exposure.
- If you find that all your data and credit reports are exposed.
- If you wish to protect the information of credit reports against identity theft.
7. When Can Credit Lock be Used?
You can use a credit lock as a preventive measure to protect all your information before any incident happens.
8. Credit Freeze Vs Lock: Which One is a Better Choice?
While the three credit agencies (bureaus) try to offer credit lock as more user-friendly and faster than a credit freeze. But in many cases, if you put a freeze on your credit at all three credit agencies, it is the most reliable way to protect your credit report. The reasons are mentioned below:-
State Law Regulates Credit Freeze
A credit lock is governed by a contract between the credit customer and credit bureaus, but credit freezes are regulated by state law. Generally, if there is any contract between consumer and bureaus, the terms are never in favor of the consumer, such as the clauses for arbitration prevent a consumer from participating in a lawsuit.
In case if scammers access your credit file, then a credit freeze is better protection than a credit lock. A consumer always has better protection against their liability under the state law. State law always provides better and stronger protection to the consumers than the contract of credit bureaus. From September 2018, credit freezes are regulated by federal law.
Credit Freezes are Free
Freezing credit is completely free for consumers. So, it is better than choosing a credit lock where you have to pay a monthly fee.
Also read:
Top 10 Ways to Stay Safe from Credit Card Frauds.
Things You Must Know About Your Credit-Card
What is CIBIL Score? Credit Score & Loan Fundamentals!
FAQs
Q. What's the difference between a credit freeze and a credit lock?
Ans- The main difference between credit lock and credit freeze is they both restrain access to your credit reports. Even though you can turn a credit lock on and off immediately, whilst adding or removing a credit freeze if you request the credit bureau.
Q. Is a credit freeze better than a credit lock?
Ans- Credit freeze is not governed by federal law while credit lock is monitored. The service terms and agreement for all bureau make it clear beforehand that there is no guarantee for an error-free operation along with uninterrupted service. A credit bureau is the most effective for all solutions.
Q. What does a credit freeze do?
Ans- A credit freeze is also known as a security freeze at no cost. A credit freeze will restrict access to your credit report from scammers and help you identify any theft. It is a good option for every individual to freeze their credit reports.
Q. How long does a credit lock last?
Ans- A credit freeze or lock extensively lasts for 7 years in a few states. It will last until you temporarily or permanently remove them. Fraud alerts are free for all.
Q- Does a Credit Freeze Affect Your Credit Score?
Ans- No, credit freezes are free, and it will not affect your credit score.
Q- What is the Way to Lock Your Credit?
Ans- By providing a username and password, you can easily activate and deactivate credit locks online or by using an app on your smartphone.
Q- How Do I Freeze My Credit?
Ans- To freeze, you have to contact three credit bureaus such as Experian, Equifax, and TransUnion and provide them certain personal information to each bureau to freeze your credit.
Q- Can Credit Freezes be Applied to Social Security Number?
Ans- Yes, a credit freeze can be applied to Social Security Number. Credit freeze helps you to identify the theft or the criminals using your personal information or Social Security Number that is stolen.
Q- Can I Lock My Credit Report for Free?
Ans- No, you cannot lock your credit report for free. It is chargeable.
Q- Can I Freeze My Credit Reports for Free?
Ans- Yes, you can freeze or unfreeze your credit reports for free.
Q- Can I Lock my Credit?
Ans- Yes, you can lock your credit to prevent credit fraud by blocking all access to your credit report.
Q- Can Credit Lock be Applied Through Credit Karma?
Ans- To lock your credit report through credit karma, you must have to be a part of the Credit Lock beta program.
Q- How Can I Know that I Have a Credit Freeze?
Ans- Once you log in to myEquifax.com, on the top right side of your dashboard, credit freeze status will indicate itself.