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This post was originally published on 9/17/21 and updated on 7/1/22.
If you’re looking for ways to help protect yourself from identity theft, you may have heard about credit locks and credit freezes. These are two different ways you can help to prevent fraudsters from opening new credit cards and taking out loans in your name.
In just the first three months of 2022, the Federal Trade Commission received more than 165,000 reports of fraud related to credit cards, loans, and leases, a 12% increase from the same period in 2021.¹ Even more alarming, many victims may not discover that fraud has occurred until they begin receiving payment notices for loans they didn’t apply for.
Because new account fraud can negatively impact your credit score and finances, using a credit lock or credit freeze is a smart way to protect yourself against this kind of fraud. Read on to learn the difference between the two options, and how to evaluate which may be right for you.
What Is a Credit Freeze?
You can activate a credit freeze by contacting each of the three major credit bureaus — Experian, Equifax, and TransUnion — and asking them to freeze your credit file.
- Equifax: Visit equifax.com/personal/credit-report-services or call 800-685-1111
- Experian: Visit experian.com/freeze/center.html or call 888-397-3742
- Transunion: Visit transunion.com/credit-help or call 888-909-8872
Once your credit file is “frozen,” companies that request your credit information will be denied access. As a result, scammers will find it more difficult to open credit cards or loans in your name, since reputable financial institutions will check these reports before extending credit. Keep in mind that there are a few exceptions, such as payday loans and buy-now-pay-later loans, where a credit check isn’t always required.
Pro Tip: Worried about a fraudulent loan slipping through the cracks even with a credit freeze in place? AAA Identity Champion’s Protect and Complete plans both include enhanced Alternative Loan Monitoring to warn you of more types of fraudulent activity that may not appear on a credit report.
When you place a credit freeze, you’ll typically receive a personal identification number (PIN) that you can use to cancel the freeze by phone.
Credit freezes are free and will not affect your credit score. But it’s important to note that you won’t be able to open new accounts in your name while the credit freeze is in place. For this reason, many parents opt to freeze credit for their minor children younger than 16 (which experts strongly recommend to protect the child’s financial future).
How to Unfreeze Credit
Once you’ve requested a credit freeze, it can take as long as a business day to take effect, and up to an hour to “thaw.” If you’re planning on opening a new account or making a big purchase that requires a credit check, be sure to request your credit freeze be lifted (also known as a “credit thaw”) with all three credit bureaus at least two days in advance to avoid unwanted delays. You can lift your freeze temporarily (for a set period of time) or permanently (until you decide otherwise). Or you can unfreeze your credit for one specific lender by setting up a single-use PIN for them to use.
To activate or deactivate a credit freeze, you’ll need to provide your Social Security Number, birth date, your personal PIN number (as mentioned above), and other identifying information to the credit bureaus to confirm your identity.
What Is a Credit Lock?
A credit lock functions very similarly to a credit freeze. The main difference is that it can be activated and deactivated instantly, whereas you may have to wait for a credit freeze or thaw to take effect. Like a credit freeze, a credit lock prevents your credit report from being shared with companies requesting your file as part of the credit application process. This effectively blocks fraudsters from opening new lines of credit in your name.
You can activate and deactivate a credit lock instantly with the click of a button on a secure online portal or mobile app, saving you the time you’d spend contacting the three credit bureaus separately.
Because of the convenience factor, credit lock services are typically offered by monitoring services for a monthly fee. While setting up your account, you’ll confirm your identity, but you won’t need to repeat this process each time you wish to change access to your credit file (like you would with a credit freeze).
Interested in locking your credit? Identity Champion Members with a Complete plan have the ability to lock and unlock their Experian® credit file through Identity Champion’s secure online portal. For more convenience and peace of mind, freeze your TransUnion and Equifax credit files, then use the ExperianⓇ Credit Lock/Unlock feature in your AAA Identity Champion online portal to unlock your credit file when you need to open a new account.
Why Choose a Credit Lock vs a Credit Freeze?
While both credit locks and freezes can protect your personal information from identity thieves, they may be best suited for different circumstances.
A credit freeze is a good option if you’re not planning on opening new credit card accounts or making any big purchases in the near future. It’s simple to initiate, free, and provides an automatic layer of protection between you and a potential scammer.
Alternatively, a credit lock may be a better choice if you’re planning on making a large purchase or applying for a credit card or if you just want the convenience of controlling exactly when your file is locked and unlocked.
New account fraud can negatively impact your credit score, but AAA Identity Champion offers convenient services like the ExperianⓇ Credit Lock feature and Alternative Loan Monitoring to alert you to potential fraudsters. Pick the plan that best suits your lifestyle today!
1 Source: The FTC’s Consumer Sentinel Network Data Book 2022