IndiaLends Advisory

By IndiaLends Advisory

Jul 09, 2018

Credit Freeze vs Credit Lock

Although it isn’t easy to steal someone’s identity with the kind of security measures that are taken today, we cannot rule out the possibility entirely. After understanding what identity theft is, you can take necessary precautions in case you have a doubt about your personal information being stolen. There are various ways that you can opt for. The first one is Fraud Alerts. It notifies the credit bureaus that your personal information “might” be stolen. And that they need to take extra precautions if a credit request is made in your name. Apart from this, there are two other ways to prevent misuse of your information. They are- Credit Freeze and Credit Lock. Read on to understand what they mean and how are they different from each other.


What is a Credit Freeze?

In the simplest terms, a credit freeze will stop creditors from accessing your credit file. Only authorized personnel can access your credit report and view it. There is a provision to update a file that will specifically name creditors or other people with permission to look at your credit report during this time. It is a powerful tool and is pivotal when considering protection against the most detrimental identity theft which is also the most difficult to detect. That is- fake new accounts opened in your name and their misuse thereafter.

This type of fraud occurs when a thief uses your personal information to open up one or more new accounts for credit or services in your name. You would learn about the new account after your credit score has degraded and debt collectors contact you for pending cash since the bills are generated in your name.


How can you get a Credit Freeze?

You will have to contact the credit reporting companies and request them for a credit freeze. The details that you will have to provide are: your name, address, date of birth and other personal information for identification and verification. Fees vary based on where you live.

After you receive your freeze request, each credit reporting company will send you a confirmation letter containing a unique PIN or password. Keep it in a safe place as you will need it if you choose to lift the freeze.


How can you lift a Credit Freeze?

Remember the PIN we mentioned in the previous section? The one which is provided to you after you submitted the Freeze request? If you wish to temporarily lift your freeze, you can do so at the online Freeze Center of the credit bureaus using this PIN.

You may choose to either lift the freeze for a specified amount of time while you are applying for credit, or to obtain a single-use PIN that you can provide only to the company with which you are applying for credit. This would mean that the creditor can access your report one-time so that they can process your application.

You can choose to unfreeze your credit file if you no longer feel the need for it. You can request permanent removal online, over the phone or by mail.


What you should know before you get a Credit Freeze?

Everything comes at a cost today and Credit Freeze is not alien to this concept. The cost to freeze your credit varies from ₹250 to ₹700 each freeze. Additionally, there is an extra charge for any time you subsequently “unfreeze” or “re-freeze” your credit.

Another crucial thing to remember is that a credit freeze can’t help you much in some cases. One such case would be when your credit details are leaked after the identity theft occurred. Also, there can be delays in credit if you yourself apply for it.


How is a Credit Freeze different from a Fraud Alert?

A fraud alert just notifies the lenders that they need to perform extra steps to verify your information before providing credit to someone who registers in your name. A credit freeze in the other hand withholds your credit information from the lenders unless otherwise specified.

Related article: Fraud Alert: Everything you should know


What is a Credit Lock?

Credit lock is quite similar to Credit Freeze. Both Credit Freeze and Credit Lock are used for withholding credit reports from lenders and financial institutions. The dissimilarity between a Credit Freeze and Credit Lock lies in the fact that it is comparatively much easier to undo a credit lock than a credit freeze. You just have to sign into your online account to lock or unlock. A lot of times, this is available on the mobile app as well. So you can access your report immediately. But in the case of a credit freeze, you need to formally notify the credit bureaus and the procedure is a teensy bit longer. Also, a credit lock costs you less than a credit freeze. A credit lock is free but you will be charged every time for a credit freeze.


Credit Freeze and Credit Lock

 Credit Freeze  Credit Lock
 Chargeable every time. Except for when you are a victim   of identity theft and have filed a report.  Free for everyone.
 Unfreeze and refreeze is also chargeable.  No extra charges
 You should go for a credit freeze if you believe that your   personal information has been stolen.  You should go for a credit lock in case you want to take preventive   measures but are still not sure about the theft.


Now that you know about both Credit Freeze and Credit Lock, you can decide which one would be better for you to go for. Keep an eye out for your credit card transactions. So that you can detect any suspicious activity before much damage is done. You should also check your credit report frequently as a healthy habit. Also, remember not to share your personal information with anyone to keep it safe. If you still have any doubts on this topic, do share with us in the comments below. Until next time!