Scammers opening a credit card or loan account in someone else’s name has become a rising concern. After all, the famous data breach at Equifax in 2017, which exposed the personal information of 147 million people, garnered worldwide media attention.
When scammers open such accounts, they can run up purchases or take loans in your name and not pay the money owed. This can leave you with debt, which can eventually lead to bankruptcy or negatively affect your credit report. This affects your ability to acquire loans and other forms of credit in the future.
Luckily, there are ways to protect and block credit reports from swindlers, and two of them are by initiating a credit freeze and a credit lock. The terms “credit freeze” and “credit lock” are used interchangeably and understandably so, because they offer similar protections. However, there are some minor differences between them. To understand what is a credit lock and freeze, their differences and more, read on.
Both credit lock and credit freeze restrict access to your credit report and help protect you from identity theft and/or fraud. When you freeze or lock credit report, it restricts lenders or creditors from accessing your credit file. This helps prevent new credit from being taken under your name.
You can get in touch with all the major credit bureaus to either freeze or unfreeze your credit. The main Indian credit bureaus are CIBIL, Experian, Equifax and CRIF High Mark.
The process of freezing your credit information is free and does not require any fee. To initiate a freeze with each of the major credit reporting bureaus, follow these steps:
If you cannot supply your PIN to unfreeze your credit, you can still lift the freeze, which will now need additional identity verification. Credit bureaus are required to freeze credit within 1 day from the date of getting a request. They are also required to lift the freeze within one hour of getting a request.
Unlike a credit freeze, a credit lock lets you control access to your credit report directly via smartphone apps or a secure website. This is an easier and more temporary way to protect your information with no delays. Credit locks make it easier to unblock your data when you want a lender or creditor to be able to check your credit.
Here’s an overview of the difference between a credit freeze and a credit lock:
| Particular | Credit Lock | Credit Freeze |
|---|---|---|
| Purpose | A preventive measure to keep sensitive information secure | When there is a high risk or suspicion of a data breach |
| Fee | Varies depending on the bureau | Available for free from all bureaus |
| Time taken | Immediate | 24 hours to freeze and 1 hour to unfreeze |
| Security level | Comparatively low, using ID and password | Higher, with PIN requirements |
It is comparatively simpler, easier and quicker to lock and unlock credit than freeze or unfreeze it. However, in most cases, putting a freeze on your credit is a better way to protect yourself from fraud.
Here’s why.
This makes it a more secure option. On the other hand, a lock is regulated by the contract between you and credit bureaus. The contract may have terms and conditions that aren’t favourable for you. For instance, there may be an arbitration clause that prevents you from participating in a lawsuit. Moreover, a freeze offers better protection against liability in case a fraudster/scammer accesses your credit profile.
This makes them a more cost-effective option, considering they also offer better security when compared to credit locks. The latter is expensive (since you have to pay a fee) and less secure.
Now you know what is a credit freeze and a lock and the difference between them, decide on the one that works best for you. If you are likely to open new credit accounts frequently, credit locks would be much easier to manage your access to credit information.
However, credit freezes are cost-effective and the more secure option. As a habit, checking and examining your credit report frequently can help you detect fraudulent activities before any damage is done.
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The process to do so depends on the bureau with which you block your credit profile. Generally, you will need to log in to your account and provide the PIN to manage your freeze/unfreeze status. In case of a lock, you can take care of unlocking it by logging in with your user ID and password too.
While both allow you to block access to your credit profile, a credit freeze is governed by law. However, when you lock credit report, it is regulated by the contract you have with the bureau. Generally, a credit lock is a preventive measure, whereas a freeze is for when you suspect fraudulent activity.
The better option between the two depends on your purpose and use of credit. A freeze offers better protection, and as such, the process of unfreezing can be longer. A lock, on the other hand, is quicker to access and unlock but does not offer the same level of security.
A freeze is a better option when you suspect fraudulent activity and want to completely block credit access. However, a credit lock is more of a preventive measure, ensuring access is available only when you want to.
A locked report is a way to block credit access, and you can manage it with a single tap or by logging into your account. It restricts lenders and other financial institutions from accessing your credit information and helps prevent any unauthorised activity.
The cost of a credit lock depends on the bureau with whom you want to lock the report. However, initiating a credit freeze is free.
To initiate a credit freeze, you can get in touch with the bureau’s service centre through the official website or app or ask them to initiate a freeze.
Initiating a credit lock restricts unauthorised access to your credit profile, thereby helping you protect yourself from fraud or identity theft.
If you have joint credit accounts and one of you suspects fraudulent activity, then yes, both spouses can initiate a credit freeze. This is because the impact of identity theft in one account may affect the other’s creditworthiness. However, doing so is not mandatory.
