Do You Really Need To Lock Your Credit?
In 2021, there were over 5.7 million accounts of fraud, identity theft, and other scams, a 17.9% increase from the previous year[*].
It feels like every week there's a new data breach or case of major fraud[*]. Aura's research has revealed that 60% of people are worried about data breaches and the safety of their personal information online, but 34% are indifferent because data breaches happen so often.
Sometimes, scammers can use the stolen information from a security breach to open bank accounts or lines of credit in your name. That's why locking or freezing your credit is one of the best ways to protect your identity, credit, and overall financial reputation.
A credit lock and a credit freeze are similar in that they prevent unauthorized access to your credit file. And the terms credit freeze, security freeze, and credit lock are often used interchangeably.
However, they have key differences.
What is a Credit Lock?
A credit lock prevents creditors and lenders from accessing your credit history. They stop anyone, including you, from opening a new credit account. Credit locks are not protected by law. Instead, they are governed by a contract between you and the credit reporting agency.
Under a credit lock, not even a credit card company would issue you a new credit card, which makes it a very appealing option if you're worried about someone opening a fraudulent line of credit in your name.
To lock your credit, you must enroll in a program with the three major credit bureaus — Equifax, Experian, and TransUnion.
It's free to lock and unlock your credit with TransUnion and Equifax. Experian charges a monthly fee of $19.99 to enroll in its credit lock program.
Credit locks are more convenient than credit freezes because they are instant. You can lock and unlock credit files online or via Aura's mobile app using biometric identity verification techniques like Face ID. You can conveniently toggle the credit lock switch on/off as desired from the Aura mobile app
Can you lock your credit by yourself?
Yes, you can lock your credit on your own. All three major consumer credit bureaus have credit locking programs available. You must sign up for each program to lock and unlock your credit file. However, we'd recommend that you allow Aura to do this for you.
Once you sign up, you'll have access to your credit files via a mobile or desktop app. To lock your credit, toggle the settings to "Locked". Toggle it back when you are ready to unlock your credit. This takes only a few seconds.
With Aura, you can lock your Experian credit with one click. If you need help locking your credit files and setting up credit monitoring, Aura's team of U.S. based agents are ready to assist.
When should you enable a credit lock?
Some experts advise to lock your credit only if you suspect fraud. Others advise a credit lock as a proactive measure (even if no credit fraud is suspected) out of an abundance of caution.
Because you can immediately toggle a credit lock on or off, it's recommended to keep your credit locked at all times. Only unlock it when you apply for a personal loan or to open a new credit account.
When you're shopping for a home or car, for example, you can:
- Log into your credit monitoring service and unlock your credit file.
- Let the creditor access your reports for a credit check.
- Lock your credit files again immediately.
There are three main credit lock programs:
- Equifax Lock & Alert. This program lets you control your Equifax credit report and files for free. You can also access other products including free credit reports and fraud alerts.
- TransUnion TrueIdentity. You can lock your TransUnion credit report for free through TrueIdentity. You also get unlimited credit report refreshes and real-time alerts for free.
- Experian CreditLock. Through Experian's service, CreditWorks, you can lock and unlock your Experian credit files. It's free for seven days and then costs $24.99 per month.
What is a Credit Freeze?
Credit freezes, also known as security freezes, will seal your credit history to help prevent identity theft and financial fraud. It limits access to your credit information until you "thaw" your credit, or remove the freeze.
If an identity thief tries to open a new credit account in your name, a lender will first check your credit report and credit score to process the application. A freeze on your account blocks anyone from accessing your credit information and can prevent unauthorized accounts from being opened.
Can it hurt your credit score?
Placing a freeze on your credit does not impact your credit score, but it'll stop credit bureaus from calculating your scores until you lift the freeze.
Are there any downsides to it?
- You'll need to unfreeze reports before applying for a legitimate loan, mortgage, credit card, or other accounts that require a credit check.
- You'll need to lift a credit freeze to apply for certain jobs that require a credit check.
- Unfreezing your credit takes time. It can take between one hour and a few days to thaw your credit.
- In cases where criminals already have access to your account (like when you've had your bank login information stolen by hackers), a credit freeze won't protect you.
How do you request a freeze?
To freeze your credit, you'll need to contact each major credit bureau and request a freeze.
Freezes last indefinitely, or until you thaw your file. In a few states, freezes expire after seven years.
When you make the request, you'll need to provide your:
- Date of birth
- Address history
- Social Security number
When requesting a credit freeze online, you can send these items electronically. Verifying your identity will be the next step. Upon approval, you'll receive a Personal Identification Number (PIN). To refreeze or unfreeze your file, you will need this PIN.
You can unfreeze your credit report online, by phone, or by mail. Federal law requires credit reporting agencies to lift the freeze within one business day if you call or submit a request online.
When should you freeze your credit?
If you suspect you are a victim of identity theft, you should freeze your credit.
Common warning signs of identity fraud include the following:
- You get bills or collection notices sent to your home, in your name or under someone else's name.
- Your credit report shows inquiries or new accounts from companies or lenders you don't know.
- You get a fraud alert from one of your banks or credit unions.
- Someone stole your personally identifiable information (PII) in a security breach.
Which Is Better — A Credit Lock or Freeze?
Choosing between a credit lock or a credit freeze comes down to two factors: cost and convenience.
- Credit locks are more convenient, but are not free of cost. With just a tap of a button, you can lock down your credit. But services like Experian charge you $24.99 per month. That's why you should try Aura instead, since pricing starts at $12 per month.
- Credit freezes are free, but take more time. Credit freezes require more steps and take longer to activate and deactivate. However, freezes are free thanks to the Federal Trade Commission (FTC).
What's the main difference?
The main difference between a credit lock and a credit freeze is how they work.
- A credit freeze involves going through a series of steps online, by phone, or by mail. If you wish to apply for new credit, you can lift your credit freeze and refreeze it on a specific date. Freezes and unfreezes can take one or more business days to be completed.
- Credit locks happen instantly. You can lock your credit with an app on your phone or computer. Just click a button, and your file is secured.
Note: You cannot freeze and lock your credit report at the same time.
- If you want to lock your credit and the file is frozen, you'll need to thaw your accounts first. Only then you can use a credit locking service.
- Enabling fraud alerts is another to protect your credit. A fraud alert requires that creditors verify your identity, like calling you on the phone, before opening new credit. It's easy to put a fraud alert in place. You can do it online, or have Aura assist you.
Do You Need Identity Theft Protection? Is It Worth It?
Credit locks and freezes are one of the best ways to protect yourself from identity theft.
When you sign up for Aura, you can secure your Experian credit report with one click, and do much more to protect your personal data online:
- Monitor credit and fraud alerts in real-time: Track all your bank and credit accounts (including your credit report) for unfamiliar activity.
- Monitor online accounts: Know right away if your online accounts have been compromised or if scammers are targeting you with a credit card scam.
- Monitor the Dark Web: Aura will continuously scan the Dark Web for your personal information, like your credit card or Social Security number.
- Use a VPN with malware protection: Keep all your devices safe from hackers and malware with military-grade encryption and Wi-Fi protection.
- Access a $1,000,000 identity theft insurance policy: Every Aura plan comes with an insurance coverage for eligible losses due to identity theft.