When Should You Lock Your Credit?

When Should You Lock Your Credit? article image.

A credit lock can help you protect your credit file when your personal information has been compromised. If you recently had a break-in at your home, lost your wallet, or believe someone's gotten hold of your Social Security number or ID through other means, it's important to take precautions to protect your credit file immediately. Locking your credit is one option to consider.

Difference Between a Credit Lock, a Credit Freeze and a Fraud Alert

Credit freezes and credit locks both limit others from viewing your credit without your permission. Fraud alerts ask creditors to verify your identity before issuing credit in your name. If a creditor can't review your reports or verify your identity, it won't be able to extend a new credit card or loan. So, if someone applies for an account in your name while one of the three following measures are in place, they shouldn't be able to get approved.

Having a fraud alert on your credit report will not prevent you from being able to open a new account once you provide proof of your identity. With a freeze or lock, you must first remove the freeze or unlock your file before you can apply.

While the benefits of a credit lock and a credit freeze are similar, how they work differs significantly. Fraud alerts are a convenient option if you have reason to believe you're a fraud victim. Here's an overview:

Credit Freeze

It's free to set up a credit freeze even if you haven't been a victim of identity theft. When you set up a credit freeze, also known as a security freeze, you'll be assigned or asked to create a PIN code or password you can use when unfreezing (thawing) your credit file. If you, or someone else, applies for a new line of credit in your name, the lender won't be able to view your credit report, which puts a stop to the application.

To freeze all three of your reports you'll need to contact Experian, TransUnion and Equifax separately. You'll be asked to provide personal identifying information, including your Social Security number, photo ID and proof of residence, and you'll need to answer questions that verify your identity.

When it comes time to lift your credit freeze, you'll have to contact each bureau and provide the PIN code or password created when the freeze was put in place. If you'd rather not lift the freeze entirely, you can get a one-time use PIN a lender can use to pull your report, or ask for the freeze to be thawed temporarily.

Credit Lock

A credit lock gives you access to credit monitoring and blocks companies from viewing your credit file. Like a credit freeze, you can coordinate with creditors to give them temporary access to your credit file whenever you want.

Experian CreditLock gives you real-time alerts when someone applies for credit in your name and comes with Identity Theft Insurance. You can also monitor your credit file daily, review your credit reports and FICO® Score monthly, and you can speak to a Credit and Fraud Resolution Agent if you ever need assistance resolving fraud or identity theft issues.

Unlike freezing your credit or putting a fraud alert in place, your credit can be locked or unlocked through Experian with just a tap or click.

Fraud Alert

Freezing or locking your credit can help prevent fraud, but there's a third option to consider: fraud alerts. Fraud alerts work a bit differently, but they're usually the more convenient method of preventing new accounts from being opened in your name.

Fraud alerts don't close off access to your reports entirely or stop any and all new credit from being opened; they simply request creditors viewing your credit report to verify your identity before issuing new credit in your name. Your ability to obtain new credit won't be affected and you can't be denied credit for having a fraud alert on your credit report (although you may not be able to be approved instantly in the store).

There are three types of fraud alerts:

  • Temporary fraud alert: This type of alert can be added to your report at any time and for any reason. It lasts one year, but can be renewed as many times as you'd like.
  • Active-duty fraud alert: These fraud alerts help protect members of the military when they're on assignment away from home. Active-duty alerts last one year.
  • Extended fraud victim alert: Reserved for victims of fraud, these alerts last seven years and require submission of the identity theft report or crime report filed with law enforcement.

Having a fraud alert in place doesn't prevent you from opening new, legitimate lines of credit, like the other options would. If you have a fraud alert on your credit report, there's no need to call around to have it lifted and reapply it later.

When Is the Right Time to Lock Your Credit?

You may consider locking your credit if you believe someone has accessed your personally identifiable information and is using it to apply for credit or services in your name. If you believe your Social Security number has been compromised or if one of your creditors experienced a data breach, taking safety measures right away can help prevent heartache later.

Even if your credit file is locked, it's important to continue monitoring your credit report. You can do this on your own or with help from Experian. Be sure to look out for major red flags, including hard inquiries you don't recognize, new credit accounts opened without your permission and unexpected changes to your credit scores.

How Do You Lock Your Credit?

You can set up a credit lock online, through any of the three credit bureaus. Each bureau has a slightly different process, but you can sign up for Experian CreditWorks℠ Premium to set up a credit lock with Experian, get three-bureau credit monitoring and up to $1 million in identity theft insurance.

When you're ready to apply for a loan or a credit card, or to let a potential employer perform a background check, you'll need to unlock your credit. Removing a credit lock is simple, just log into your account or use your mobile device to swipe or click on your security preference and unlock your file.

Keep Your Information Safe

A credit lock can prevent certain types of fraud, such as new credit accounts being created without your permission, but there are other types of fraud it's not designed to protect against. Fraudsters who access your mail or your online accounts can still try to use your credit card, or attempt tax fraud or insurance fraud by using your personal information.

Along with monitoring your credit for unusual activity, be sure to always practice caution with your sensitive information. Shred personal mail and account statements before throwing them away. Avoid carrying your Social Security card in your wallet or car and never give out personal information to anybody you don't trust. Make sure you're aware of common scams so you can always take the best measures to keep you and your family safe.

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