When you have questions about anything credit related, The Real Credit Queen, Angela Setters Bessard has the answers. This week she's taking the overwhelm out of locking and freezing your credit. This episode is going to answer every question you ever had about the process, why you would do it, and how it helps you.
Locking your credit and freezing your credit are similar concepts aimed at preventing unauthorized access to your credit report and thus protecting against identity theft, but they have some differences:
- Credit Freeze Federally Regulated and backed by the US Justice Department
- Definition: A credit freeze restricts access to your credit report by potential creditors. When your credit is frozen, creditors cannot pull your credit report to open new accounts in your name.
- Initiation: You can initiate a credit freeze with each of the four major credit bureaus (Equifax, Experian, TransUnion & Innovis) individually. You may (very rare) need to pay a fee depending on your state laws, although most states provide this service for free.
- Process: You need to contact each credit bureau separately to freeze your credit, the 4 credit agencies are Experian, Trans Union, Equifax and Innovis.
- Credit Lock Private Service provided by Private Companies:
- Definition: A credit lock also prevents creditors from accessing your credit report to open new accounts, similar to a credit freeze accept that the credit agencies charge a fee for this service.
- Initiation: Credit locks are often offered by the credit bureaus themselves or by third-party services. They used to be more convenient to use than freezes because they could be activated or deactivated instantly online or through an app but now all agencies provide online access.
- Process: Unlike a credit freeze, the terms and conditions for credit locks can vary widely between providers. All of these providers charge fees.
Key Differences:
- Activation and Deactivation: One is Free while the other requires a membership but both allow you to do everything online.
- Cost: Credit freezes very rarely have fees associated with them depending on state laws and the circumstances under which you're requesting the freeze. Credit locks always come with costs, and fees are dependent on the provider and the services offered.
- Legal Protection: Credit freezes are mandated by law and provide specific legal protections against identity theft, while credit locks are often marketed as a convenience and do not offer the same legal protections.
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