If you’ve had your personal data compromised by a data breach, you’re probably worried about identity theft. Luckily, you can take a few measures to protect both your identity and your credit. Two of the most popular methods are a credit freeze and a credit lock. But what’s the difference, and which one should you use?
Before doing either, it’s important to consider your current financial plans. If you plan to take out a loan and are using a loan consolidation calculator, adding these restrictions to your credit report will make getting approved more difficult. It’s not impossible, and the extra steps you’ll need to take are certainly worth the effort if your data has been compromised. Still, it’s worth considering the additional time and effort, especially if you need to get approved quickly.
Here’s what you need to know about credit freezes and credit locks.
What is a credit freeze?
A credit freeze is a temporary measure that restricts access to your credit reports by creditors. This will help protect you if your personal data has been compromised. When you freeze your credit, no new applications will be approved, and existing applications will be processed as though you do not have a credit history. The freeze will last for three years and can be removed early for an additional small fee.
To freeze your account, you need to contact each of the three major credit bureaus – Experian, TransUnion, and Equifax – and provide them with your full name, address, and credit card number. You may also need to provide a copy of your driver’s license or other identification.
What is a credit lock?
A credit lock is a more permanent measure that prevents unauthorized use of your credit account. A credit lock can last for up to 10 years and can only be removed by contacting the credit bureau directly or by using a dedicated phone app. No new applications will be approved when you lock your account, and any existing applications will be denied unless you contact the credit bureau ahead of time.
To initiate a lock, you need to contact each credit bureau and provide your full name, address, date of birth, and social security number. You will also need to supply a copy of valid identification, such as a driver’s license or passport.
What’s the difference?
There are a few key differences between a credit freeze and a credit lock. A credit freeze will only protect your current borrowing information, while a credit lock will protect both your current and future borrowing information. Additionally, a credit freeze is temporary, while a credit lock is permanent (or at least until you actively have it removed).
How do I choose between a credit freeze and credit lock?
Credit freezes and locks can help protect your borrowing information from being accessed by other organizations, such as creditors or landlords. However, there are a few key differences between the two options. Whether to freeze or lock your credit should be based on your specific needs and circumstances.
If you are concerned about a data breach and want to protect your credit, then a credit freeze may be the best option. If you plan to borrow money in the near future and would like to keep all of your borrowing information confidential but aren’t aware of any current identity theft attempts, then a credit lock may be the better option for you since it’s considered more preventative than reactive.
The bottom line
When exploring options on how to protect your credit, consider speaking with a credit counseling service or credit monitoring company to understand your specific needs and how each option can help protect you.