Credit Freezes and Credit Locks - What’s the deal?

Maura Schauss |
Categories

By Nina L. Falci, Client Operations Coordinator

If you’ve never been a victim of identity theft, consider yourself lucky. However, whether you’ve been a victim or not, there are steps you can take to help protect yourself. Credit freezes and credit locks help protect your financial assets, personal data, and, most importantly, your credit score from being compromised by fraud.

What are Credit Freezes and Credit Locks?

Credit freezes and credit locks are tools you can use to help block unauthorized individuals from accessing your credit file and submitting credit applications, for items such as credit cards and loans, in your name.

What’s the Difference Between Credit Freeze and Credit Lock?

While a credit freeze and a credit lock are very similar in their ability to help you protect your credit file, they do have some important differences[1]. Review this feature chart to quickly compare the differences:

FEATURE

CREDIT FREEZE

CREDIT LOCK

STRENGTH OF PROTECTION

Promise to guard your credit account is guaranteed by law

Promise to guard your credit account is agreed to by contract with the credit company

COST

Required to be free

Free but the company will offer other ID protections products for cost

TIME TO FREEZE/LOCK

1 to 24 hours

Instant

TIME TO UNFREEZE/UNLOCK

1 to 24 hours, longer if you lose your PIN

Instant

FORUM FOR REDRESS - if credit report is breeched by unauthorized party[2]

Legal recourse

Depends upon agreement with the credit company

How Do Credit Freezes and Credit Locks Work?

To set up a credit freeze or lock, you’ll need to contact each of the three big credit reporting agencies: Equifax®, Experian®, and TransUnion® online or by phone and follow their instructions. Keep in mind the following:

  • If you need to undergo a credit check soon, you should consider waiting to place a freeze or lock until after your transaction has been completed.
  • If you place a freeze or lock on your accounts and need to open a new credit card, or get approved for a car loan or mortgage, you’ll need to ask the service provider which credit agency they use and contact that agency to arrange for the freeze or lock to be temporarily lifted.
  • Note that under law, during a freeze, there are some groups who will still be able to access your credit reports (e.g., current lenders and card issuers, utility companies, landlords and rental agencies). Regarding a lock, you would need to check the terms and conditions of the lock agreement to determine any exceptions.[3]

What Else Can I Do to Protect My Credit Reports?

General advice is to review copies of your credit report – and those of your children – for free from the three main credit agencies throughout the year.  You can start by visiting the U.S. Federal Trade Commission website to get your credit report.  

Consider freezing or locking your child’s credit reports. Sometimes fraudsters identify and exploit social security numbers of minors because they know the kids won’t be applying for credit for years, and they take advantage of that fact.  

You may also want to consider setting up fraud alerts with the credit agencies for a fee. 

Has My Credit Report Been Hacked?

Be vigilant and reach out to the credit agencies to address the situation, if you answer “yes” to one or more of the following questions:

  • Are bills and/or collections notices you don’t recognize being mailed to your address?
  • Have new inquiries or credit accounts appeared on your credit report which you didn’t authorize?
  • Has your banking institution alerted you about fraudulent activity on a credit account?
  • Did you receive a notification that you could be a victim of a data breach?

Reach Out to a Professional for Personalized Guidance

Everyone wants to know how to best protect their belongings, personal information, and data. With fraudulent activity at an all-time high, you have to be one step ahead of scammers, skimmers, and identity thieves to properly protect your assets. Whether you choose a credit lock or credit freeze, be sure to consult with a professional who can guide you in the right direction.

We at Washington Wealth Advisors understand how critical it is to protect your financial health, so it’s important to consult with an advisor who can provide advice on complicated situations such as identity theft. If you’re interested in working together for your financial peace of mind, call our office at 703.584.2700, book an initial consultation online or email clientservices@washingtonwealthadv.com.

 

Important WASHINGTON WEALTH ADVISORS DISCLOSURES Information

 

ABOUT WASHINGTON WEALTH ADVISORS

Washington Wealth Advisors is a fee-only registered investment advisory firm serving busy families, executives, women building wealth, and small business owners. We provide Wealth Advisory Services—financial planning coupled with asset management—guided by a personalized investment strategy based on each client’s unique goals. Our unbiased advice, independent approach, and proactive investment management help to support our client’s overall financial peace of mind.