Who isn’t worried about scammers opening credit card accounts or loans in their names? Especially after the famous data breach at Equifax in 2017, exposing the personal information of 147 million people that garnered worldwide media attention? And when scammers open these accounts, they can run up purchases or open loans in your name and not pay them back. This can leave you with credit card debt which can eventually make you go bankrupt, or negatively affect your credit reports, affecting your ability to acquire loans and other forms of credit in the future.
Luckily, there are ways to protect your credit reports from these swindlers; two of them being a credit freeze and a credit lock. The terms “credit freeze” and “credit lock” are used interchangeably, and understandably so because they offer similar protections, but there are some minor differences to them, which we’re going to cover in detail below.
What are the credit freeze and credit lock?
Both credit freeze and credit lock restrict access to your credit report and thus help protect you from identity-theft-fraud. When you lock or freeze your credit, lenders or creditors are restricted from accessing your credit file. You need to get in touch with all the major credit bureaus to either lock or freeze your credit. The main Indian credit bureaus are CIBIL, Experian, Equifax, CRISIL, ICRA, and CRIF High Mark.
How to freeze/unfreeze your credit
Step 1: Initiate a freeze with each of the major credit reporting bureaus (often CIBIL)
Step 2: Provide your personal information.
Step 3: Receive a PIN which is used to later thaw/unfreeze your credit.
Step 4: Manage your credit freeze/unfreeze.
If you cannot supply your PIN to unfreeze your credit, the freeze can still be lifted, but additional identity verification will be required. Credit bureaus are required to freeze within 24 hours of receiving a request and must lift the freeze within one hour following a request. The process of freezing your credit information is free under federal law and does not require any fee.
How to lock/unlock your credit
Step 1: Download the credit bureau apps or visit the websites.
Step 2: Log in with your username and password.
Step 3: Lock/unlock with just a tap.
Unlike credit freezes, credit locks let you control the access to your credit reports directly, via smartphone apps or a secure website. This is an easier and temporary way to protect your information with no delays for a brief period of time. Credit locks make it easier to unblock your data when you want a lender or creditor to be able to check your credit.
Credit Freeze vs. Credit Lock
Why a Credit Freeze Is a Better Choice
Credit locks are quicker and more user friendly than credit freezes. However, in most cases, putting a freeze on your credit is a better way to protect yourself from fraud. Here’s why.
- Credit freezes are regulated by federal law. This gives them an upper hand in the aspect of security. On the other hand, credit locks are governed by a contract between you and the credit bureau(s). Credit lock contracts might have terms and conditions that aren’t favorable to the consumer, like arbitration clauses that prevent you from participating in a lawsuit, for instance. Also, if a fraudster accesses your credit file while your freeze is in place, you’ll have better protection against liability.
- Credit freezes are free. Credit freezes are a better cost-effective option, considering that they’re free and provide better security when compared to credit locks that are expensive (you’ve to pay a monthly fee) and are less secure.
Now you know the difference between a credit freeze and a credit lock. Decide which one would work best for you. If you’re a person who opens new credit frequently, credit locks would be much easier in managing your credit access information. However, credit freezes are cost-effective and the secure option to go for. As a habit, checking and examining your credit report frequently can help you detect any fraudulent activities before any damage is done.
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