Credit Lock vs Credit Freeze – How TransUnion, Equifax & Experian Handle Both

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There are several credit reporting agencies that collect account data from consumer credit accounts in the U.S., Canada, and around the world. There are three agencies that are considered to be “major” credit reporting agencies in the United States: TransUnion, Equifax, and Experian.

These credit reporting agencies put together reports about your payment, spending, and credit habits for potential lenders to review. Based on the scores and information contained in these reports, a lender is able to determine how much risk is applicable in a financing decision. Based on those risk factors, a decision to extend credit, and at what interest rate, can be calculated.

In this era of identity theft, it is possible for someone with criminal intent to cause a lot of damage to your credit profile. You may not even realize this has happened until the damage is already present.

If you have detected identity theft activities or there are suspicious account activities associated with your name, then you may qualify for a credit lock or a credit freeze.

Credit Lock vs Credit Freeze: Which is Better?

A credit lock and a credit freeze are two different ways to protect your credit information. Although the terms are used interchangeably because both options can stop criminals from opening new accounts in your name, there are some key differences to consider.

If you decide to initiate a credit freeze at the three major credit reporting bureaus, then what you are doing is restricting the access lenders have to your credit report. Most lenders will not be able to see your credit information until you initiate a request to remove the credit freeze.

Because most lenders are not going to provide you with new credit unless they can view your credit history, then you’re protected from an unauthorized fraudulent account being opened. That also means you will be unable to obtain new credit unless you provide explicit permission to the credit reporting agencies to provide this information.

You are permitted to unlock your credit report immediately, at any time, if you need to provide a lender with access to this information. You are required to use a PIN to remove the credit freeze from your report.

A credit freeze is free.

Locking your credit provides a similar outcome. You will be able to limit access to your credit information once this request is approved. You can unlock your credit report at any time, whenever you want, by submitting a request to do so.

The major credit bureaus often charge a monthly fee to provide credit locking services. Unlike a credit fraud alert, which only needs to be made to one credit bureau to filter to all of them, you must initiate a credit freeze or a credit lock with TransUnion, Equifax, and Experian for it to apply to all your potential credit information.

What Is the Cost of a Credit Lock?

Through the TrueIdentity services provided by TransUnion, it is possible for some consumers to obtain a free credit lock. This will allow you to lock the reports that are generated by this credit reporting bureau.

Experian offers a service that is called IdentityWorks. The premium service sells for $24.99 per month, which gives you access to a locking function for your credit reports. Equifax offers a free locking service that includes alerts should someone attempt to access your credit profile.

Even if you take advantage of the two free options, third parties would still be able to access credit information through Experian. You’d be paying more than $250 per year to protect your information through this credit bureau.

That is why a credit freeze is a popular option. On September 21, 2018, a law in the United States makes it free to freeze, thaw, or eliminate your credit freeze for free. This makes it possible to prevent credit from being approved in your name without your permission.

Before this law went into effect, there were costs at the state level for consumers to freeze or make changes to the status of their credit freeze.

Why Choose a Credit Freeze?

Outside of an absolutely free experience, a credit freeze is able to help you be protected against identity theft and fraud. Although you’ll be required to enter a PIN whenever a change is required to allow access to your credit file, this restricted access limits the damage that a criminal can cause with your personal identity.

You have the ability to lift this freeze for lenders, credit card providers, insurance companies, and even potential employers. Just enter the PIN, then make the changes which are required.

It is easy to initiate your first credit freeze. Just contact the major credit reporting bureau, either through the credit freeze center or their toll-free customer service number, then provide the information that is required to begin this process.

You can also submit a request for a credit freeze through the mail. You’ll need to send a letter requesting the credit freeze to TransUnion, Equifax, and Experian to ensure all three credit reporting bureaus initiate this action.

The three major credit reporting bureaus have a webpage where these requests can be initiated as well.

When you process a request to thaw your credit report for a lender, it will be unfrozen within 60 minutes of when you made the request. If you’re planning a large purchase, or you have lost your PIN, then plan ahead with this process to ensure your needs can be met. The credit bureaus are required to verify your identity to thaw the report for lenders to take a look at it.

When Should I Freeze or Lock My Credit Profile?

Anyone who believes they have been a victim of identity theft should immediately consider a credit freeze or a credit lock. Even if you only suspect that there may be unusual activity with your identity or credit profile, it can be useful to place a freeze or lock on your personal information.

There are 4 other situations where a credit freeze or a credit lock may be helpful in protecting your identity.

#1. You are receiving unusual collection notices.
If you are receiving bills under your name, or under another name at your address, and they are not yours, then consider a credit freeze. This can be an indication that your identity is being “lightly” used by someone to skirt their own financial responsibilities. You might also think about doing this if you are receiving collection phone calls or calls from process servers from people or circumstances that are not associated with your personal financial choices or situations.

#2. You see new inquiries on your credit report.
If you have not applied for new credit in the past 12-24 months, then there should be no new inquiries for credit on your credit report. If TransUnion, Equifax, or Experian are reporting a new inquiry, then there is a good chance that your identity may be compromised. Even if the lender is someone with whom you already do business, your credit profile cannot be accessed without permission – even for something like a credit line increase. Always question new inquiries if you are unsure of them.

#3. You receive notifications of fraudulent incidents.
Banks, credit unions, credit card lenders, and other financial institutions are very good about detecting fraudulent activities in real time. Many of these institutions will notify you immediately if an activity is deemed to be unusual compared to your usual spending habits. Some companies, such as Discover, will even deny transactions that are deemed to be unusual unless you authorize the transaction. Any time you receive a notification of fraudulent activity, investigate it. You may have a purchase you’ve forgotten about, or you may have someone using your identity to their own benefit.

#4. You receive a notification letter of a data breach.
If you have been the victim of a data breach, then a credit freeze is an excellent idea to pursue. Even if you have not detected unusual activity on your identity or credit report, you do have personal information available to people who might choose to use it one day. Whenever you receive a notification from an agency that your identity may have been compromised, assume that it has been and pursue a credit freeze.

Who Can Access a Locked or Frozen Credit Report?

When a credit freeze or credit lock is processed, you are able to prevent most on the inquiries that require information from your credit report.

Note that “most” is not “all” inquiries.

There are still several ways that your credit information can be accessed, in part or in whole. You can always view your own credit report, once your identity has been verified.

If you have a pre-existing relationship with a creditor, like working with Capital One for an auto loan, then access to your credit information is still permitted.

Landlords or rental agencies are permitted to access your credit information as part of their background screening process. The same is true for utility companies or phone companies when you request services.

Debt collection agencies are still permitted to access your credit report if they are attempting to collect a payment. Child support agencies can pursue debts in the same manner, as well as access credit information to determine how much child support is requested.

Certain prescreening offers of credit are still permitted. These offers do not count as a hard credit pull, which is what a locked or frozen credit report prevents.

You can grant permission for potential employers or your current employer to view your credit report. The same is true for an insurance agent if you’re attempting to underwrite an insurance policy for yourself.

Government agencies may also be able to access your credit information, with a warrant or other court order, even if a credit freeze or credit lock is in place.

Through the Fair Credit Reporting Act, every national credit bureau is required to keep a record of who has accessed your credit information. When you apply for a rental home, the landlord’s access of the credit report is recorded. You’ll be able to see when that request was made.

If you see records of actions that do not line up with your requests or applications, then this can be a sign of attempting fraud, if not outright identity theft.

Credit Reports for Children and Freezing or Locking

If you have children under the age of 16, then you have the ability to freeze their credit report if one should exist.

Children do not generally have a credit report. It is possible to have one created for them, then frozen, to protect their identity.

To initiate this request, you must prove that you have the authority to do so. That means providing a birth certificate that names you as the parent of the child, a court order for guardianship, or a valid power of attorney.

For children in foster care, the social working, department in charge, or other professional may be required to be part of the process.

A credit freeze vs credit lock is important to consider at all ages if you suspect fraud. It is an indication that your identity should be verified before credit is extended.