Credit freezes: Time to rethink your protection?

Some prefer locks; all should have fraud alerts

The days of paying to protect your credit files are coming to an end.

Credit freezes and unfreezes with the three major credit bureaus — Equifax, Experian and TransUnion — will be free for everyone by federal law starting Sept. 21. Fraud alerts, which always have been free, will be extended from 90 days to a year. Credit locks will continue to be free at two bureaus and offered as part of bundled services at a third.

How will these changes affect which you should pick? Consumer advocates continue to recommend freezes, and not having to pay to freeze or thaw credit makes the case even more compelling. But some people may prefer locks for the convenience.

At the very least, everyone should set up fraud alerts, which require businesses to take reasonable steps to ensure that a person applying for credit in your name is actually you.

If you want to block access

Credit freezes offer the strongest protection against an unauthorized person opening an account or getting credit in your name. Credit locks, which the bureaus voluntarily offer, do much the same thing: They make your credit records off-limits to potential lenders and credit card issuers. Credit freezes are:

❚ Mandated by federal law to be made available.

❚ Free from each credit bureau, without special conditions.

❚ Placed and lifted online or by phone, requiring a PIN to change status (taking minutes).

❚ Potentially time-consuming – if you lose your PIN, you may have to request a new one via U.S. mail. Credit locks are:

❚ Offered voluntarily by each credit bureau.

❚ Free from Equifax; offered free with an agreement to receive marketing emails from TransUnion; and offered for a fee as part of a monthly monitoring service by Experian.

❚ Placed and lifted with an app.

❚ Relatively quick and easy to regain access to if you forget a password.

What the experts choose

So which is better? Chi Chi Wu, staff attorney for the National Consumer Law Center, says it’s the freeze, hands-down.

“A freeze is something that is now mandated by federal law,” she says, “whereas the lock is a voluntary feature, and so if something goes wrong ... there’s really not much recourse, except for maybe contract law.”

Her credit reports are frozen. But credit expert John Ulzheimer made a split decision. At Equifax, “the practical difference between a lock and a freeze is negligible in my eyes,” he says. He chose the lock because it’s more convenient.

He froze his accounts at the other two bureaus because he was unwilling to pay for a lock or to accept marketing emails in exchange for a free lock.

Both say no one should be without at least a fraud alert.

“There’s really nothing wrong with obligating a bank to at least call you and say, ‘Hey John, are you really the one who is standing in front of a finance manager at a car dealership trying to get an auto loan right now?’ I think that’s just smart credit management,” Ulzheimer said.