Credit Lock and Credit Freeze - What's the difference?
The world is getting more and more digitized by the day. Everything from banking to shopping is increasingly relying on the flawless functioning of virtual cogs and gears.
Consequently, this move to digitization has invited its own set of pitfalls, such as identity theft, which is when someone uses another person's personal identifying information (name, ID number, or credit card number) without their permission and with an intent to commit fraud or other crimes.
Understandably then, it's certainly a valid area of concern if you happen to own a credit card, as in the event of a breach, a fraudster could easily open your credit file and make purchases in your name, leaving you in heavy debt in your credit reports. Some could even go as far as opening loans in your name, which will then show up in the credit reports.
Thankfully, there are provisions in place to tackle this issue, and they include the ability to 'freeze' or 'lock' your credit reports at India's credit bureaus.
It's true that both credit lock and credit freeze do more or less the same thing, which is to safeguard your credit reports in the event of identity theft by way of a data breach. But there is a difference between the two, which we'll delve into.
Think of credit lock as a way to restrict lenders from accessing your credit reports. When a credit lock is applied, it lets you lock and unlock your credit report using your mobile. You can even do it without needing to remember your card's personal identification number (PIN).
Therefore, If a fraudster tries to open a credit report account using your name, the credit lock will protect you. Note that any of the reputed credit bureaus will assist you in the process of placing a credit lock. You can manage the credit lock through an app, using a user ID and password.
Also referred to as a security freeze, a credit freeze is similar to a credit lock, given that they restrict lenders from accessing your credit report without your consent. A credit freeze is more useful in the case that any theft that might have occurred. When you apply for a credit freeze, creditors cannot access your credit reports until you grant permission to all the different credit bureaus in India to unfreeze your reports. Also, unlike credit lock, you have to use a PIN (or a password), for freezing or unfreezing your credit reports at any time.
When to use a credit freeze?
If you feel any of the below scenarios have already transpired, then consider going for a credit freeze:
- You find that your credit reports are exposed.
- You've been subjected to identity theft.
- You experience a data breach.
How to do a credit freeze?
- Contact the credit bureaus
- Provide them with your personal information
- Receive the PIN they send you
- Use it to freeze or unfreeze your credit card
When to use a credit lock?
A credit lock is a preventive measure, for the most part, so use it as a deterrent in situations such as when you're unable to locate your card or you won't be using it for an extended period.
How to use a credit lock?
Reach out to the credit bureau. You can then manage the credit lock/unlock online or through an app on your smartphone with just a username and password.
What's the difference between credit lock and credit freeze?
To sum up then, here are the key differences between a credit lock and credit freeze:
Credit LockCredit FreezeProtected by username and password.Protected by Personal Identification Number(PIN).Chargeable.Free.Used as a preventive measure to protect a credit file.Used when your personal information is already under threat.Easy to activate or deactivate online or with a smartphone app, using username and password.After mailing your request to credit bureaus, you have to call the bureaus or follow the online procedure and then generate a PIN to freeze or unfreeze your credit report.It's a simple process.It's complex and takes more time and involvement.
It's worth stressing that while a credit card comes with its share of conveniences, it's a responsibility all the same. So it's important that you take precautions and avoid making common credit card mistakes.
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