While there are plenty of services for consumers to protect their credit report from identity thieves and fraud, it’s beneficial to learn the definition of these various terms, including the differences between a fraud alert, credit freeze and credit lock.
One of the first steps you should consider taking when you suspect you are a victim of identity theft or fraud is to place a fraud alert with one of the three credit reporting bureaus.
- Definition: A fraud alert is a notice on your credit file that lets lenders know that they should take the step to contact you and verify your identity before approving you for new credit.
- Cost: A fraud alert is available at no charge to place on your report.
- How long it lasts: An initial fraud alert will be active for 90 days, but it could be renewed for another 90 days after the first alert expires. There is also the option to apply for an extended fraud alert that will last for 7 years.
You could also request a copy of your credit report to ensure no new credit lines were opened without your knowledge.
If you feel as though you need more protection, you could take one step further and request a credit freeze, also called a security freeze. This precaution is a good solution for consumers who believe they have had their information or payment cards stolen and are at high risk of fraud.
- Definition: A security freeze will stop creditors from looking at or accessing your credit file entirely. Only those you authorize to view your credit report will be able to access it, including loved ones and creditors. You could update a file that will specifically name creditors or other people with permission to look at your credit report.
- Cost: Although a fraud alert is free, there may be charges for a security freeze depending on your state of residence and whether or not you were a victim of identity theft. Some states also have a fee for lifting the security freeze or providing you a replacement PIN to log into your account to access information about the freeze.
- How long it lasts: The time the freeze is in effect may depend on the state law. You might also have to follow certain steps to lift the freeze if you want to stop it before the period is up.
Be careful when you institute a credit freeze as once it is placed, it may delay approval for new credit as creditors may not be able to see your report to evaluate your financial standing.
A credit lock is a service offered by credit reporting company Equifax that is similar to a security freeze with some exceptions.
- Definition: A credit lock gives you the power to block access to your Equifax credit file like a security freeze. However, the difference is that this credit lock allows you to lock and unlock your account online easily rather than having to verify your identity every time you want to lift or place a security freeze.
- Cost: There is an annual fee associated with the credit lock service.
- How long it lasts: Since a credit lock is part of a paid service, it will most likely last as long as you pay the annual fee.
You could also choose to name specific companies that you would like to be approved to access your Equifax credit report. The credit lock only works for Equifax and not the other two credit reporting companies.
Understanding Fraud Alerts, Credit Freezes, & Credit Locks
With the differences between these services, consumers are better able to prevent fraud before it results in financial losses and damaged credit reports.