If you’re a little worried about your credit report and identity theft in the midst of recent data breaches, we don’t blame you! The good news is there are several ways you can protect yourself and your hard-earned credit score. One action you can take is to freeze, lock, or put a fraud alert on your credit — but what are the differences amongst the 3 options?
A fraud alert requires companies to verify your identity when someone tries to open an account in your name — even if it’s you opening it. It’s easy to implement: just call one of the credit monitoring agencies to put the year-long alert on your report. By law, one agency must notify the other two. It is free, but you will have to remember to call again every year to extend the alert.
A credit freeze restricts access to your credit file so no one can open a new account in your name (not even you). Freezing and unfreezing your credit is free. If you put in the request online or by phone, the agency must place the freeze within one business day, and lift the freeze within one hour. Mail typically takes a few days. You will receive a PIN that you need to remember to freeze and unfreeze. Unlike a fraud alert, you need to contact each of the three credit monitoring agencies to put your freeze in place.
A credit lock is similar to a freeze in that it restricts access to your credit file so no one can open a new account in your name. Unlike a freeze, your credit can be locked or unlocked on a computer or phone app, and is usually instantaneous. There is a cost for credit locks, and it lasts as long as you like. Again, you need to contact (and pay monthly) each of the three agencies to lock your credit.
Although credit locks and freezes essentially do the same thing — prevent anyone from opening an account in your name — there are some important differences to keep in mind when deciding which to use, because you can’t do both. While everyone’s situation is unique and needs to be evaluated on an individual basis, a recent article from consumerreports.org suggests a credit freeze may be a better option for a few reasons — most importantly, because it offers you protection from financial liability by state law. Adversely, a credit lock is unclear who would be financially liable if something were to happen. You may have to plan in advance to open a line of credit (no on-the-fly credit cards at your favorite retail stores!), but a credit freeze may mean long-term, free protection for you and your credit report.