Does a Credit Lock Really Provide You Protection?

By Brian Koerner

A lock on your credit report, also known as a credit or security "freeze," is a weapon that you can add to your arsenal for combating identity theft. A credit lock allows you to "lock" or "freeze" your credit report to prevent new credit or a new account from being issued in your name.
A lending institution or other creditor typically reviews your credit report when an application for credit is submitted in your name. If you have a lock on your credit file, access to your credit report is denied in most cases, which prevents new credit or new accounts from being opened in your name.

A credit lock lasts until you remove it. You can temporarily remove it to get credit issued or open a new account. You can then have it reinstated when you're done. Placing a lock on your credit file doesn't impact your credit score or prevent you from obtaining a copy of your own credit report.

Some states allow any consumer to implement a credit lock, while others require that the consumer be a victim of identity theft. The costs of placing, temporarily lifting or altogether removing a credit lock varies from state to state and can depend, as I noted, on whether or not you're an identity theft victim.

How to lock your credit report

Placing a lock on your credit report is a simple process, but it does take a little time to do it right. You need to contact the credit bureau of your choosing, follow their process (which includes validating that you are who you say you are), and then pay the associated fees. The fees vary from state to state, but they typically range from $5 to $10 for placing the initial lock. Since not all creditors use the same credit bureau, I suggest placing the lock with each of the three major bureaus — Experian, Equifax, and TransUnion.

The pros of a credit lock

A credit lock does provide you a real, tangible benefit, particularly as it relates to new account fraud — provided, however, that the creditor actually runs your credit report before extending credit or opening an account. For this particular type of fraud, it is indeed a very effective tool that has stopped many identity crooks from obtaining credit or opening accounts in a victim's name.

The cons of a credit lock

A credit lock isn't a cure-all for identity theft protection. It's just one of many tools that you should use for optimal protection. Here are some things to keep in mind when considering a credit lock:

  • It doesn't provide comprehensive protection. A credit lock doesn't protect when a credit report isn't run, nor does it protect against medical identity theft or an identity crook who exploits your existing accounts, such as your credit cards, wireless, checking/savings, phone, utility accounts etc. A credit lock won't help you if a crook uses your name to gain employment (unless a credit check is required to obtain the job) or commit a crime. A credit lock simply helps prevent the opening of new accounts that require a credit check — nothing more.
  • It's costly. Paying fees to each of the credit bureaus to place, temporarily remove, and/or finally remove the credit lock can be costly. While costs vary, they typically run between $5 and $10 per event at each of the credit bureaus. But when you realize that you need to file it with all three bureaus and will likely need to unlock it from time to time, you can see that the fees will add up. For some, this can be cost-prohibitive.
  • It's inconvenient. Want to run down to the local furniture outlet to purchase some furniture on instant credit? Guess again. If you didn't temporarily lift the credit lock, the creditor probably won't be able to issue you credit. You either have to temporarily lift the lock at all of the credit bureaus, or find out precisely which bureau the creditor uses and then temporarily lift it at that particular bureau.

Does a credit lock offer real protection?

A credit lock certainly does provide you real protection against new accounts being opened in your name — but that's where the protection stops. It's hardly the only tool available to combat identity theft. It's also limited, costly and inconvenient.

Even so, it's a tool that you can use to fight identity theft, and, when appropriate, you should consider doing so because it does serve its intended purpose. When your identity has been stolen or you otherwise believe that your Social Security number has been compromised, you need to implement this tool. New account fraud can be very costly, and a lock on your credit file does help prevent further credit lines or accounts from being opened in your name.