Credit Freeze Vs. Credit Lock: Know the Difference

10 APRIL, 2023

Are you worried about hackers and scammers conning you with opening the credit account in your name? Scammers can take up loans and credit cards in your name and not pay them back which can leave you in a pile of debt. This may even make you go bankrupt and affect your credit score negatively, thereby impacting your future eligibility for taking any personal loan or credit card.

We all are living in a hostile digital environment where we are at the risk of data or identity theft anytime, anywhere. However, with the awareness of the right moves and wise strategies, you can protect your credit information and report from these hackers. Two of the best ways to guard your information from hackers are – credit freeze and credit lock. These two terms are often used interchangeably because of a few minor differences between them. Let’s understand them in detail here.

What Is Credit Freeze Meaning?

A credit account freeze meaning restricts your credit report to avoid identity theft and fraud. During the credit freeze period you won’t be able to get a new credit card. It lasts until you remove the same. The good news is that a credit freeze does not impact your credit score or prevent you from accessing your own credit report.

How Does Credit Freeze Works?

Now that the meaning of account freeze is clear, let’s know how it works. To place a "freeze" on your credit, contact the credit bureau. For this, visit their official website and request and credit freeze.  It gives an extra layer of security to your credit profile and there’s no fee for it. So use this credit freeze facility to secure your credit.

Steps to Freeze/Unfreeze Your Credit

Freezing or unfreezing your credit information is easy and anyone can do it with the following steps:

• Request for a credit freeze with any of the credit information bureaus
• Input your personal information for verification
• Receive a PIN to be provided later when you wish to unfreeze your credit
• Manage your credit freeze/unfreeze

In future, when you wish to unfreeze the credit and are unable to provide the PIN, you can still do so by providing additional verification information. The process of freezing the information takes from one hour up to 24 hours and is entirely free of any cost to the user.

What Is Credit Lock Meaning?

Credit lock is a preventive measure to freeze accounts. When you compare the credit freeze meaning with credit lock, you’ll see both of these are similar. The difference is that credit locks are easy to use. It comes with features, such as real-time alerts for suspicious activities.

How Does Credit Lock Works?

Sign up with a credit bureau and create an account, download their app. Now, activate or deactivate the credit lock feature. When using this freeze lock service, you don’t need to intimate the credit bureau as everything will be informed to them via your account activity.

Steps to Lock/Unlock Credit

Download the respective credit bureau’s app or visit their website

• Log in to the website/app with your username and password
• Access Lock/unlock feature in your profile, initiate the required action with a tap.

Compared to a credit freeze, credit lock is an easier and quicker procedure that can be done in an instant via your smartphone. It also makes it easier for a user to quickly unlock the credit data when a lender or bank is trying to access the credit file.

Credit Freeze vs. Credit Lock – Simplified

Why is Credit Freeze a More Secure Option?

Though credit lock or unlock is a much quicker and easier option than a credit freeze, choosing the latter is a far more secure option to ward off any potential case of credit theft. Read on to know why:

• Credit freeze option, being regulated by the Federal Law, is a far more secure option over credit lock. While, on the other side, a credit lock is just a contract between you and your credit bureau. Credit lock contracts are often believed to be having terms and conditions that might not work in a user’s favour like the clause of arbitration that stops you from filing a lawsuit. Additionally, if a hacker or fraudster tries to access your credit information while your credit account is frozen, you stand a better chance of protection against the resulting liability.
• When it comes to the cost to the user, credit freeze definitely has an upper hand since it is free of cost. The procedure to initiate a credit freeze, being governed by Federal Law, doesn’t carry any cost and provide enhanced security when compared to credit lock.

Now that you are well aware of the difference between a credit freeze and a credit lock, deciding the one that works best for you shouldn’t be a difficult choice. The option of choosing between both depends on several factors. If you’re the one that opens a new credit quite frequently, a credit lock might work better in your favour as you can control them at your fingertips. For the rest, a credit freeze is a better and safer option in the longer run. Keeping both in hand, always make sure to check your credit report periodically to rule out any possible incidents of credit card fraud or identity theft issues.