Credit Report: Freeze, Lock & Fraud Alerts
You can either freeze or lock each of your credit reports. This article will explain the difference between the two as well as why you (probably) do want to lock or freeze your credit reports.
There are three main credit bureaus in the US: Experian, Equifax and TransUnion. Each of them maintains a credit file on you. That file is indexed on your social security number and contains historic data on any accounts you've opened and what your repayment history was. Lenders and certain other folks (e.g. prospective landlords) may access your credit file to determine if they want to extend you credit, or otherwise do business with you.
If someone else fraudulently opens accounts in your name, that's identify theft. Before a fraudster can open that fraudulent account in your name, the counterparty will check your credit file.
So, in theory, if your credit file is either locked or frozen, said fraudster will be unable to open an account (in your name). The freeze or lock prevents potential creditors from pulling your credit report, which provides a high degree of assurance that fraudsters won't be able to open credit accounts in your name.
Once your account is locked or frozen, if anyone attempts to open a new bank, credit account of loan in your name, that application will automatically be denied. It's a bit inconvenient because if you choose to open a (legit) account in your own name, you'll need to unlock or unfreeze your credit account before making the application — otherwise even your (legit) credit application will be automatically denied.
That automatic denial is great: it will be nearly impossible to steal your identity. That automatic denial is a pain because it makes it more difficult for you to open accounts.
If you know (or suspect) you've already been a victim of identify theft, be sure to read the additional recommended steps at the bottom of this page. 👇
Freeze vs. Lock: What's the Difference?
A credit freeze is required and defined by Federal law. As such, it offers the most protection and is free of charge. The downside is that the process to freeze and unfreeze is more arduous.
A credit lock is a concept created not by law but by the credit bureaus themselves. It is designed to be easier to toggle on and off, although the protections it offers may not be as complete or solid as a freeze.
Best Practice: Freeze it All! (& How to Do That)
The recommended best practice it simply to freeze all of your credit reports. It offers the best protection.
If you have any reason to believe you are at risk for credit theft, or any of your personal information has been compromised, putting a freeze in place at each of the three major credit bureaus is without question the right approach.
If you don't have reason to believe your data has been compromised, it's a judgment call. Freezing is one more thing you have to manage, but it is the best-in-class protection.
Should I Lock?
If you choose to freeze your accounts, there is no reason to lock. If you opt not to freeze, locking is a good second choice.
Both TransUnion and Equifax offer credit locks for free, although you have to create an account with each of them. Experian only offers an account lock as part of a paid credit monitoring subscription.
Identity Already Stolen? Consider these steps.
If you know (or suspect) your personal information is at risk, or that someone has already open fraudulent accounts in your name, there are some additional steps you should consider.
First, take this identity theft assessment offered by the Federal Trade Commission. It will walk you through what next steps are best for your situation.
Second, consider putting place a fraud alert in place at the credit bureaus. You need only contact one of the three major credit bureaus - once the fraud alert is put in place, the bureau is obligated to inform the other two. This overview from the Federal Trade Commission provides a good overview of the two different types of fraud alerts you might want to put in place.
If you suspect your private information is at risk, it's STRONGLY recommended that you also FREEZE your credit files.