credit freeze

In the wake of the Equifax data breach that the credit bureau announced in September that left millions of people with stolen identifying information from their credit data, consumers have been warned to take extra steps to protect their personal information.

Checking a credit report at least once a month to make sure thieves haven’t opened accounts in your name may not be enough to protect your personal information and thus your credit score. Credit monitoring services can also help, as can checking bank and other financial statements for unauthorized charges on credit cards.

But what may help the most are three tools that are common in the credit world but may not be so common to consumers: fraud alerts, security freezes, and credit locks. They don’t all have to be used at the same time, but knowing how each can prevent the fraudulent use of your credit data can help you choose the protection that’s best for your situation.

Here’s a breakdown of how each works:

Fraud alert

This is a free alert you can place with one of the three major credit reporting bureaus — Equifax, Experian or TransUnion. Once the alert is placed with one bureau, it will pass it on to the other two.

A fraud alert is a notice put on your credit report warning prospective lenders that you’re the victim of identity theft. Lenders who see this warning should take extra steps to verify your identity before giving credit to someone claiming to be you. For example, a bank may try to contact you in various ways and verify your identity before approving you for new credit.

An initial fraud alert lasts for 90 days. It can be renewed for another 90 days after the first alert expires. It can also be extended for seven years if you’ve been the victim of identity theft.

The 90-day alert allows you to get a free credit report from each credit bureau each time you renew the alert. That’s in addition to the free annual credit report consumers are already entitled to from each credit reporting bureau.

Credit freeze

Also called a security freeze, a credit freeze is an extra step beyond a fraud alert that can offer more protection. It can cost $2 to $12 to start, lift or remove a credit freeze, though most states  require it to be free for ID theft victims.

A credit freeze does what the name implies — it “freezes” or locks access to a credit file against anyone trying to open a new account or get new credit in the person’s name. It’s more severe than a fraud alert. If you think your information or credit cards have been stolen and you’re at high risk of fraud, a credit freeze may be worthwhile.

It blocks most lenders from seeing your credit history and can be the best way to protect against fraud.

But that protection comes with a price. It also shuts out companies that you may want to do business with, such as lenders, insurers and cellular service providers that may want to check your credit report before doing business with you. To get around that with a credit freeze on, you have to temporarily lift the freeze with a PIN and set a date for the freeze to be reinstated automatically.

Banks that you already have accounts with can still check your credit report under a credit freeze, as can collection agencies and certain government agencies.

A credit freeze may be free, depending on the state you live in and your circumstances. If you’re the victim of identity theft and have filed a police report, you may receive a free credit freeze.

Otherwise, you may have to pay $2 to $12 to lift the security freeze at each credit bureau. You may also have to pay to get a replacement PIN so you can log into your account to access information about the freeze.

These voluntary freezes are offered to all consumers, even if state law (such as Mississippi) explicitly offers security freezes only to ID theft victims, according to Consumers Union.

The length of a credit freeze may depend on state law. To end a freeze before it expires, you’ll have to follow certain steps.

Another caution: Before starting a credit freeze, you should know that it may delay approval for new credit because creditors won’t be able to view your credit report. So if you’re planning on buying a car soon and need an auto loan, you may want to wait until after your loan is approved. Until then, a fraud alert may be your best protection.

Credit lock

A credit lock is similar to a credit freeze and should be easier to use than a freeze. It’s offered by a credit reporting company and allows users to lock and unlock the account online easily instead of having to verify their identity each time a lift or security freeze is done.

Credit locks usually require an annual fee, such as around $60. Equifax is waiving its locking and unlocking fees through Nov. 21, when it will end its offer of free credit monitoring, according to CNBC.

A credit lock lasts for as long as you pay the annual fee.

The lock only works for the credit reporting company that you start it with, requiring credit locks to be done with each company if you want all of your information to be locked.

You can name specific companies to be approved for access to your Equifax credit report, for example. So if you plan on applying for an auto loan and expect Auto Company XYZ to check your credit, then you can approve its access on your Equifax credit report through a credit lock.

Mix and match protections

Among the three choices — fraud alert, credit freeze and credit lock — know that you can do more than one at the same time.

A fraud alert is free and can be your first step to help stop ID theft. If you’re at a high risk for fraud, a credit freeze can also help, though it can be costly and cumbersome to stop and start. A credit lock may be easier, but can cost more. 

You should also considering credit monitoring. For this, check out our top picks for credit monitoring services.

Whatever methods you choose, don’t leave protecting your personal information to the credit reporting agencies or anyone else. Keep regular tabs on your credit report and be on the lookout for fraudulent activity.