Locking your credit is one way to restrict access to your credit report and protect yourself from someone fraudulently opening accounts in your name. You may have heard of a credit freeze, which is similar in many ways. Though the terms are often used interchangeably, there are a few important differences.
What is a credit lock?
A credit lock is a service offered by credit reporting agencies to restrict access to your credit report. To lock your report, you’ll need to contact each of the three credit reporting agencies (Experian, Equifax and TransUnion) and sign up for their credit lock service.
When is my credit history usually accessed?
Any time a loan, credit check or new credit account is requested in your name, whether by you or someone else, your credit history will be pulled from one or more of the credit agencies to assess your creditworthiness. These credit history pulls are themselves added to your credit report so you can see a history of requests in your name by accessing a free credit report at annualcreditreport.com.
How does the credit lock work?
When you lock your credit you prevent access to your credit reports. That means companies receiving a request for new credit in your name won’t be able to check your credit report and therefore shouldn’t complete the request. Since you usually don’t know which of the three credit agencies will get the credit request, you have to register for a credit lock with all of them for the most effective protection.
When your credit is locked, no one (even you) should be able to open a new credit account. So, if you want to apply for new credit, you must unlock your reports to allow a credit check. While it denies new lenders access to your report, your current lenders and their agencies can still access your report to send and receive data on your current accounts.
How do I unlock my report?
This is one of the main differences between a credit freeze and a credit lock: ease and convenience. You can unlock and relock your credit report at any time using each credit agency’s app on your computer or mobile device. This provides almost instant access to your credit information. In contrast, a credit freeze requires a phone call or web access along with a Personal Identification Number (PIN) at each credit agency and could take up to 48 hours to unfreeze and freeze again.
Can I lock or freeze my credit at all three credit agencies simultaneously?
No. There’s no central place where you can lock or freeze all your reports at once. You’ll need to lock or freeze your credit reports at all three agencies for the most effective coverage.
Is there a cost and where can I find more information?
One difference between a credit freeze and credit lock as of December 2020 is that credit freezes are free and must be offered by the credit agency as mandated by federal law.
In contrast, each agency has its own credit lock product with different pricing, features and add-ons, so closely review what you’re signing up for.
What other differences are there between credit locks and freezes?
Credit freezes are mandated by the federal government and must be offered and adhere to specific rules. A credit lock is a product with some convenient features offered individually by each of the credit agencies as an alternative to a credit freeze.
Because of this, credit locks may not provide the same protections in the case of a breach. For example. some service agreements contain an arbitration clause and a class-action waiver. This means that you may give up your right to sue the company or join a lawsuit if the lock fails.
Need help deciding if you need to do a credit lock or freeze? Hop on the BrightDime dashboard and chat with a coach today!