Credit Lock vs. Credit Freeze

What is a Security Freeze?

A security freeze, commonly known as a credit freeze, refers to the consumers’ right as provided by the credit reporting agencies to lock up access to their credit report. This measure prevents credit, loans, and services from being approved in your name without your consent, serving as a strong guard against identity theft and unauthorized credit activity.

Description and Function

A security freeze in reality closes your credit report with the credit bureau; therefore, potential creditors and other third parties won’t be able to access your credit information until the freeze is lifted. This means that when someone opens an account in your name, most of the creditors will find it difficult to agree to new credit in the absence of access to your credit history.

Example: Suppose someone had your personal information and tried to apply for a credit card. If you have a security freeze placed in your name, the credit card company would try pulling your credit report, which would most likely fail. Therefore, without access to your credit history, they would most likely deny the fraudulent application, protecting you from any debt and credit damage.

Legal Protections

The right to place a security freeze was guaranteed under federal law by the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018. This law made it free to place and lift freezes and demanded that credit bureaus act within certain timeframes:

Placing a Freeze. Where a consumer makes a request online or by telephone, the credit bureau must place the freeze within one business day. If through the mail, it must be put in place within three business days.
Lifting a Freeze. If the consumer requests the removal of the freeze over the telephone or by internet, the bureau must lift the freeze within one hour. If the request is to lift the freeze by mail, it must be done within three business days.

How to Freeze Your Credit

Contact Credit Bureaus: You must request a freeze with each of the three major credit bureaus separately – Equifax, Experian, and TransUnion. This can be typically done online, over the phone, or through the mail.
Information Required: You will have to submit your name, address, date of birth, Social Security number, and other personal information to verify your identity.
PIN Setup and Confirmation: Each bureau will confirm your freeze to you and provide you with a PIN or password, which you can use to lift the freeze in the future.

Example: John finds that his personal information is out as a result of one of those data breaches. He decides to place a security freeze on his credit files. He visits each of the three major credit bureau’s websites online, inputs his personal information, and activates the freezes. Each bureau confirms the freeze and provides him with a unique PIN, which he stores securely.

When to Unfreeze Your Credit

You may decide to lift (thaw) your security freeze temporarily or permanently if you need to allow a legitimate credit inquiry, such as when you’re applying for a new credit card, renting an apartment, or buying a car.

Application for New Credit Whether it’s for a credit card, a car loan, or a mortgage, you will need to unlock your credit to enable lenders to access your credit report as part of their decision.
Example: Jane’s going to buy a home and needs a mortgage. She’ll need to release her credit in advance so that lenders can look at her credit report as part of their decision-making process.
New Job Application
Some employers use credit reports as a part of the job application process, particularly in jobs that entail financial responsibility. For example, John might need to unfreeze his credit if his potential employer would like a review of his credit history while applying for the financial analyst position.
Renting Apartment
Most of the landlords check credit reports to evaluate whether the candidate is suitable to be a good renter.
Example: Emily needs to unfreeze her credit before she gets a place to live in the new city she has been searching for.
Setting Up For Utility Services
Utility companies might check your credit in deciding whether you should pay a security deposit.
Example: Alex is moving to a new apartment; therefore, he must use his credit card in setting up electricity and water services with a brief thaw of his credit as temporary release for the process.

How to Unfreeze Your Credit

Plan Ahead
Plan for time and indicate just when it is you’re going to need your report to be freed, in essence preparing in advance as time may flow differently from what was estimated. Within one hour if done online or by phone, the credit bureaus may lift a freeze; however, it is wise to provide extra time for any delays that might occur.

Get in Touch with Credit Bureaus

This works if you put a freeze on all the credit reports.

Equifax. Online or over the phone is where you input your PIN or password for Equifax, depending on whether this is done on their website or call a phone that’s automated.

Experian. To unfreeze your account online or use your PIN over the phone.

TransUnion. In case you’re unable to make your account through a personalized request, use the same website as well as a phone system. Make sure you give them your PIN and in case you’re set on freezing on the temporary basis, but you don’t want to deal with it consistently, then consider removing a freezing factor permanently.

Time Range Temporary Lift. Provide the date when it would be applicable in case of applications for an apartment.
Permanent Removal. If your only desire is making changes that invariably expose credit checks in frequency or else if you wish to do away with having credit frozen, then consider permanently lifting the freeze.

How to Lift a Credit Freeze

You can lift your credit freeze whenever you need to allow legitimate credit checks. Here is how to do it:

Contact every bureau one by one, using the details provided above.
Provide your PIN or password that you set at the time of freezing.
Ask for a lift, either for a particular time or forever, depending on what you need.

In most cases, a lift of a credit freeze can be completed quite quickly—online or telephone requests can be processed within hours.

What is a Credit Lock?

A credit lock is a proactive security measure allowing an individual to take protection over their credit reports from unauthorized access. It works like a credit freeze but is often easier to manage and can be managed by the consumer directly using a secure online interface by the credit bureaus. This guide explains in detail what a credit lock is, its features, and how it works.
A credit lock lets you restrict access to your credit report with the simple click of a button via mobile apps or websites. This lock prevents lenders, credit card companies, and other financial institutions from checking your credit information, a factor that may discourage identity thieves from opening new accounts on your behalf.

Key Features

Ease of Use: Credit locks are pretty easy to enable or disable on demand, via web or app interfaces, as compared to the rigidity surrounding freezing and thawing credit.
Rapid Activation and Deactivation: A credit lock can be removed in a snap, unlike credit freezes that can take as long as up to an hour to be lifted and can slow down your future legitimate credit inquiry.

Practical Applications

Shopping for a Car Loan

Scenario: Sarah is browsing through various car financing options and anticipates numerous dealers will conduct credit checks on her.
Example: She applies a lock just before going to the dealership and unlocks it right after, ensuring no other unauthorized credit check takes place.

Applying for a Mortgage

Scenario: John is applying for a mortgage and has his broker check credit multiple times with different financial institutions to secure the best rate.
Example: John temporarily unlocks his credit during his appointment with the mortgage broker, then locks it back up after the process is over and done with, through an app on his phone.

3. Advantages over Credit Freezes

Flexibility and Control: Users can control their credit file faster and at any time as they need to, and better information helps to control their credit information.

User-Friendly Interfaces: Credit lock options are well-managed through mobile applications or websites that are simple for even non-technical users.

4. Conceivable Weaknesses and Concerns

Cost: Unlike credit freezes, which are usually free, some credit locks could come with a monthly charge, depending on the credit bureau and the level of service opted for.

User-Applied Laws: Credit lock protections may not be as potent as those under a credit freeze. Obligations and protections under a credit lock are by a user agreement rather than federal law.

How to Set Up a Credit Lock

Choose a Service

Research and choose a credit lock service offered by one of the three major credit bureaus—Equifax, Experian, or TransUnion. Decide if you want service that locks your credit with just one bureau or all three.

Set up an Account

Go to the chosen credit bureau’s website or download their app. You will need to create an account, verify your identity, and provide all the necessary documentation, just like when setting up a credit freeze.

Activate the Lock

After giving identification details and filling out the required forms, proceed to click on the “activate lock” button. This usually involves setting up a PIN or password that you will be using to lock or unlock your credit report.

Manage Your Credit Lock

Monitor your account regularly to ensure there are no breaches or any unauthorized changes. It is also advisable to go to the bureau’s website or app to lock or unlock your credit as needed.

Credit Lock vs. Credit Freeze: Who Benefits?

Making Personal Financial Information Secure has been made easy by two main options—a credit lock and a credit freeze. Both tools are preventing the new credit account opened by identity thieves who have stolen information about you from your credit report, and thus it prevents such unauthorized access. They differ in terms of ease of use, legal protections, and costs. Below is a detailed comparison of both options, their advantages and disadvantages, and the scenarios where each would be ideal.

Credit Lock

Pros

Ease of Use: Credit locks are more user-friendly since they have an easy option for customers in managing the locking/unlocking activities through a mobile app or online portal from the credit bureaus. Customers can easily lock and unlock their credit report, which provides easy control over who gets the right to access their credit details.
Speed: The locking and unlocking happen almost instantly, especially for consumers who may need to change their locks quite often while being on credit.

Cons

Cost: Unlike credit freezes, credit lock may come with a monthly fee for its services that come complete with additional identity theft protection tools.
Less Legal Protection: Credit locks are much less protected by the consumer than that of a credit freeze. The protections they come with are governed by the terms of the service agreement, which are not set down by statutory backing.

Example: A consumer would prefer a credit lock since it is easy to handle. For example, a real estate investor who is always checking new properties and may need to secure loans very fast would benefit from its management easily on the go.

Credit Freeze

Pros

Cost-Effective: It is free to freeze and lift the freezes or remove, which means consumers would not need to pay an extra cost.
Strong Legal Protections: Credit freezes are governed by federal law, especially the Fair Credit Reporting Act (FCRA), therefore giving robust legal protection, including stipulated time frames within which the credit bureaus have to act.

Cons

Inconvenience: Each time you want to apply for new credit, there is a need to plan ahead to lift the freeze temporarily, something that may delay the application since a lot of steps must be followed, and it will take a lot of time.
Less Flexibility: Once you want to apply for new credit, you need to plan and prepare to lift the freeze temporarily.

Ideal Usage Scenario: A retiree who rarely applies for new credit, with no need to frequently procure credit, may decide on a credit freeze due to the robust legal protections it affords and the cost-effectiveness. This option suits those who are able to adjust to the occasional inconvenience of a slower process of lifting the freeze.

Choosing Between Credit Lock and Credit Freeze. It is to the convenience and more frequent/time regular consumer, who needs quick easy access to financial services as it provides. In this way, it is perfect for the people who do not open new lines of credit many times but have one-time protection, which they can rely on with less effort.

Credit Lock and Credit Freeze Usage Among Credit Card Holders

Year	Credit Lock Usage Among Credit Card Holders (%)	Credit Freeze Usage Among Credit Card Holders (%)
2015	8	18
2016	12	22
2017	15	30
2018	22	40
2019	28	35
2020	35	30
2021	45	28
2022	50	25

Analysis and Trends. The above table highlights a steep increase in the popularity of credit locks among credit card users from 2015 to 2022. Increased dependence on digital financial services and strong credit activities might have resulted in more credit card users preferring the quick and flexible security solution offered by credit locks.

Peak in Initial Popularity and Subsequent Decline of Credit Freezes. Credit freezes peaked in popularity in 2018, influenced by laws that made them free and sensationalized information on major credit reporting agencies’ data breaches causing a wave of security concerns across the country. Nevertheless, they declined in use with the fact that solutions to manage credit locks via apps became easier for active credit card users.

Impact of Regulatory Changes and Market Events. The usage of credit freezes peaked in 2018 due to the fact that major credit reporting agencies were then mandated to offer free credit freezes post some major data breaches. This regulatory change boosted their appeal at that time.

Convenience Over Rigidity. The trend suggests that those more likely to use their credit cards are inclining towards the convenience and user-friendliness of credit locks as against the more rigid and time-consuming process of credit freezes.

If you need help deciding between a credit lock and a credit freeze, but you are not sure which is the best option for your particular needs, our consumer law firm has just what you need. Our law firm focuses on detailed legal and financial help for both clients regarding credit lock and credit freeze decisions. For more, contact us at our hotline for a consultation today. Let us help you make an informed decision that protects your credit and enhances your financial health while maximizing your convenience and peace of mind. Choose wisely, and choose RBT Consumer Law Firm to guide you along your journey of managing your credit security.