A topic that frequently crops up in matters of credit management and security is the difference between a credit lock and a credit freeze. These two terms are related to protecting your credit report, but they serve different purposes.
What is a credit freeze?
A credit freeze is a security measure that restricts access to your credit report. When you place a credit freeze, the credit bureaus, including TransUnion, Equifax, and Experian, will not release your credit report to potential creditors or lenders without your consent. This means that if someone attempts to open a new credit account in your name, the creditor won't be able to access your credit history, effectively thwarting fraudulent attempts.
What is a credit lock?
On the other hand, a credit lock serves a similar purpose but is typically offered by credit bureaus themselves as part of their services. When you lock your credit report, it also prevents unauthorised access, much like a credit freeze. The primary difference lies in how the lock is placed and removed. With a credit freeze, you must contact each credit bureau individually to request the freeze to be lifted temporarily. In contrast, a credit lock can usually be applied or lifted conveniently through an online portal or mobile app provided by the credit bureau.
Compare credit freeze and credit lock
In essence, both a credit freeze and a credit lock provide a layer of security against identity theft and fraudulent activities. Both options prevent unauthorised parties from viewing your credit report, thus reducing the risk of someone opening accounts in your name. However, the method of implementation and ease of use set them apart.
When to use a credit freeze
A credit freeze is a wise choice when you want long-term protection against potential identity theft or when you have no immediate plans for new credit applications. If you don't anticipate needing to apply for new credit, placing a credit freeze can provide peace of mind without much inconvenience. It's worth noting that you'll need to lift the freeze temporarily if you plan to apply for credit, which might involve some waiting time and additional steps.
When to use a credit lock
A credit lock is more suitable when you foresee the need for frequent access to your credit report, perhaps due to ongoing financial activities like applying for loans or credit cards. The convenience of being able to lock and unlock your credit report instantly through an app or website can be appealing for those who need regular access.
Who can access a frozen or locked credit report?
It's essential to understand that neither a credit freeze nor a credit lock affects your ability to access your own credit report or score. You can still obtain your credit information even when it's frozen or locked. Additionally, existing creditors and certain government agencies, such as law enforcement with proper authorisation, can access your credit report even if it's frozen or locked.
How to apply a credit lock or credit freeze on your credit report
Though credit locks and credit freeze are not available in India from any of the credit bureaus, including TransUnion CIBIL, you can take the following steps to safeguard your accounts:
- Avoiding financial transactions on public and unsecured wi-fi services
- Refraining from sharing sensitive financial information or personal details online, including on social media
- Ensure you only use encrypted and tokenised services for making payments
- Regularly review your credit report and score to identify instances of inaccuracy so you can dispute them promptly
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