What is a Credit Lock? A Credit Lock Versus Credit Freeze Breakdown




In researching how to respond to the Equifax hack and my deep dive into one of the possible responses – proactively placing a credit freeze – I couldn’t help but notice that there’s another new credit protection service option being pushed by the credit bureaus heavily these days: a credit lock.

To be honest, I hadn’t heard of a credit lock prior, and assumed that a “credit lock” was just an alternative name for a credit freeze. Sadly, there’s more to it than that (more confusion for consumers – yay!). So, I decided to dig in and learn everything I could about credit locks, so that I could share my findings with you.

What is a Credit Lock?

credit lockA credit lock is a relatively new credit protection service being offered by the three credit bureaus – Equifax, TransUnion, and Experian. The bureaus are marketing credit locks as a faster, more convenient alternative to credit freezes.

Similar to credit freezes, when you place a credit lock, you inform the credit bureau to not release your credit report to a party that requests it, without your express consent. Without access to your credit report, a credit lock will theoretically prevent companies from reviewing your credit history and then extending credit, loans, and services to someone using your identification. In effect, this prevents fraudulent new accounts being opened with your identification.

When you place a credit lock with a bureau, you’re only placing it with that one bureau. This means that in order to effectively prevent someone from using your identity to access credit, you should be placing a credit lock with all three bureaus (similar to credit freezes).

Also, similar to “lifting a freeze”, you can “unlock” your report with that bureau at any time, in the event that you legitimately need companies to be able to view your credit reports for whatever reason. As with locking, you’ll want to unlock with all three.

The similarities naturally beg the question, “What’s the difference between a credit lock and a credit freeze?”.

Credit Lock Vs Credit Freeze: What’s the Difference?

The most notable difference between a credit lock and credit freeze is that credit freezes are regulated and guaranteed by state law. If, for example, your credit report was improperly accessed during a freeze, you’d be protected from financial losses as the responsibility would fall on the credit bureau. Credit locks, on the other hand, are a direct contractual agreement between you and the individual credit bureau, and it’s unclear where the liability would fall. To get the service, you sign their unregulated agreement.




All three bureaus have some sort of arbitration and class action waivers, among other legalese, that you should be wary of (the same kind that earned Equifax a lot of blowback right after the hack).

Additionally, when signing up for credit lock services, it appears that it may boost the likelihood that you will be marketed to by 3rd parties. TransUnion, for example, has the following statement in their very lengthy credit lock service agreement,

“YOU UNDERSTAND THAT IF YOU ARE RECEIVING A FREE PRODUCT, THAT YOU AGREE TO RECEIVE TARGETED OFFERS BY TRANSUNION AND OTHER PARTIES IN EXCHANGE FOR RECEIVING THE PRODUCT AT NO CHARGE.”

Well, OK then. Thanks for the all-caps.

Price is another factor here. Credit freeze prices are regulated on a state-by-state level. All are free if you’ve been a victim of ID theft and have filed proper paperwork with local law enforcement or your department of motor vehicles. Otherwise, the cost varies, and there can be a cost associated with every freeze and every lift. Credit locks, on the other hand, are either free of charge (TransUnion now, Equifax in January), $4.95/month (Equifax now) or $4.99 (first month) and 24.99/month thereafter with Experian.

Here’s a chart that further breaks down the differences between a credit lock and credit freeze:

Credit Lock Versus Credit Freeze

 Credit Lock:Credit Freeze:
What it is:A credit lock informs the credit bureau to not release your credit report to a party that requests it, without your express consent. Without access to your credit report, a credit lock will theoretically prevent companies from reviewing your credit history & extending credit, loans, and services to someone using your identification. In effect, this prevents fraudulent new accounts being opened with your identification.A credit freeze informs the credit bureau to not release your credit report to a party that requests it, without your express consent. Without access to your credit report, a credit freeze will theoretically prevent companies from reviewing your credit history & extending credit, loans, and services to someone using your identification. In effect, this prevents fraudulent new accounts being opened with your identification.
Where to get:
What it costs:

  • TransUnion: Free

  • Experian: $4.99 for the 1st month; $24.99/month thereafter

  • Equifax: $4.95/month; free lifetime service (Jan. 2018)


  • Free, if you are a documented victim of identity theft.

  • Otherwise, cost varies by state, but is same at each bureau.

Pros:

  • Purportedly easier/quicker to implement and lift a lock than a freeze.

  • Implementation of lock/unlock is instant, according to Experian/TransUnion (Equifax says 24-48 hours).

  • Includes credit monitoring alerts.


  • Regulated by state law - liability with credit bureau.

  • Gives consumers more legal protections.

  • No marketing data sharing.

  • Can be cheaper than locks, given Experian's price.

Cons:

  • Need to lock with all 3 bureaus to be effective.

  • Can be expensive with Experian's monthly cost.

  • Unregulated by state law - liability is murky if financial loss occurs.

  • Includes arbitration, class action, & other legal waivers that surrender consumer rights.

  • Marketing data sharing can result.


  • Need to freeze with all 3 bureaus to be effective.

  • Can be expensive if not obtained for free (after documented identity theft).

  • Can be a 24-48 hour time lag for freeze and thaw.

Should you Use a Credit Lock?

After my research, I would not recommend using a credit lock. In addition to the murky consumer protections, legalities, and possible data re-selling for marketing purposes, Experian’s pricing is such that the financials or credit locks don’t make sense compared to credit freezes (keeping in mind that a freeze or lock with 1 bureau needs to be a freeze or lock with all 3). For the time being, I’m using neither lock nor freeze, and sticking to close reactive credit monitoring. If and when I’m targeted by identity thieves, I would opt for credit freezes over credit locks.

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