Many consumers rightly concerned about identity theft and other financial crimes have opted for a credit freeze, which is something that money expert Clark Howard strongly recommends. But many others have been persuaded to buy a credit lock, which is not the same as a credit freeze.
In this article, I’ll explain the difference between a credit lock and a credit freeze and why Clark thinks one is clearly better than the other.
The Difference Between a Credit Freeze and a Credit Lock
A credit lock and credit freeze do similar things in that they limit who can access your credit. With that being said, there are some major differences between the two, which we will explore.
What is a Credit Lock?
Credit locking is a financial service that almost always costs money, usually through a subscription. The paid services all promise to protect your credit information, though their methods differ from company to company.
Credit locks are typically administered by companies that offer credit monitoring services. You’ve probably seen commercials for LifeLock.
The credit bureaus usually bundle credit lock services into their larger anti-fraud offerings, which will cost you. TransUnion has premium credit monitoring for $29.95/month. Experian CreditLock costs $24.99 a month as part of its paid Experian CreditWorks membership. Equifax’s Lock & Alert is a free standalone service outside of its credit monitoring suite.
What Is a Credit Freeze?
A credit freeze is something you initiate directly with one (or all) of the major credit reporting bureaus: Equifax, TransUnion and Experian. As a federally regulated action, a credit freeze is governed by U.S. law.
Once your credit is frozen, companies and individuals won’t be able to view your credit file, which means they’ll be blocked from initiating any new loans. That also means that if you want to borrow money, you’ll have to “thaw” your credit for the lender to gain access.
To clear up any confusion, here’s a side-by-side table of the differences between a credit lock and credit freeze.
Credit Lock vs. Credit Freeze: The Differences
| Credit Lock | Credit Freeze |
|---|---|
| Prevents others from accessing your credit information. | Prevents others from accessing your credit information and/or opening new credit in your name. |
| Typically costs money with anti-fraud companies and 2 out of the 3 major credit bureaus. | Free of charge with all 3 credit bureaus |
| Run by credit bureaus and paid anti-fraud services. | Administered by credit bureaus only. |
| Governed only by policies of the respective companies. | Governed by federal law. |
| Not clear who is liable for any losses. | Losses legally protected. |
Clark advises you not to pay for credit locks and the redundant “extras” that companies bundle with them.
“It is absolutely ridiculous that still, after all of the scandals, the credit bureaus still try to get into our wallets,” says Clark. “They make plenty of money building dossiers on us and selling our information over and over again. I hate it.”
How To Lock My Credit for Free
Clark wants you to know that by taking advantage of a couple of free financial products, you can basically lock your credit for free!
He recommends that you follow these simple steps to protect your finances:
- Sign up for an account with Credit Karma or Credit Sesame to get free credit monitoring and notifications of suspicious activity.
- Freeze your credit with all three main credit bureaus.
Once you do that, you’ve essentially locked your credit for free!
Final Thoughts
While they have similar names, a credit lock and credit freeze have some distinct differences that you need to know about. Most importantly, unlike most credit locks, credit freezes are free.
Faced with a choice of a credit lock or credit freeze, Clark wants you to choose the latter.
“A credit freeze allows you to seal your credit reports, so only you can temporarily ‘thaw’ your credit when legitimate applications for credit and services need to be processed,” he says. “The added layer of security means that thieves can’t establish new credit in your name even if they are able to obtain your personal information.”
Just by following the simple steps to freeze your credit, you will bolster your protection against fraud and identity theft for FREE!
