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2020 gave us so much to monitor that your credit might have taken a backseat. Unfortunately, credit is not something that any of us can or should completely disregard. Analysts are still crunching the numbers on FICO trends and consumer behaviors during the ongoing crisis, but early analysis suggests that FICO scores have been trending downward.
Declining FICO scores are likely a result of a number of factors, including widespread loss of employment, payment deferrals, fraud and identity theft. While it’s difficult to create a solid causal link between the uptick in fraud or identity theft and the pandemic, it’s clear that the other factors involved are reorienting consumer priority toward immediate problems like the insecurity of the most basic financial needs. Monitoring credit can easily become something to push away as tomorrow’s problem when food on the table is not guaranteed today.
Understandable as the dire situations many face are, protecting credit becomes more critical during a global crisis. Fortunately, there are easy ways folks can limit their exposure that will neither hurt credit reputations nor leave identities vulnerable to predators. You might hear about using a credit lock or credit freeze as a tool to preserve your credit profile. Because these two terms are often used interchangeably, we’ll break down the differences and clear up any confusion.
Credit freezes and credit locks are two ways by which a consumer can equip their credit information with extra security measures like passwords and PINs. This helps secure access and keep identity thieves out. Both credit locks and credit freezes are available from the three main credit reporting bureaus (TransUnion, Experian and Equifax) and are available to every consumer.
What is a credit freeze? Credit freezes are federally regulated and accessible to everyone for free. To freeze credit information over all three bureaus, however, a freeze must be requested from each bureau separately. Once requested, the freeze will activate within 24 hours.
If a lift or end to a credit freeze is requested, the freeze will not necessarily be lifted immediately. It can take about an hour for the credit freeze to lift once the relevant password or PIN is provided. This means some forethought is required: Thawing the freeze is required before requesting new lines of credit; creditors will be unable to access reports if a credit file is frozen.
A credit lock, on the other hand, offers the same protections and security measures a credit freeze does, but can be enabled or disabled instantly using a mobile device or via the web. This is convenient because users can easily grant access to a creditor while standing in a checkout line or out running errands.
Credit locks are not federally regulated so free access to all consumers is not a guarantee. Equifax offers a free product called Lock & Alert that offers protection for an Equifax report and TransUnion also has a free product called TrueIdentity that provides ID theft insurance and lock services for a TransUnion file.
All three major bureaus also offer services for a fee. These include Experian’s CreditLock which monitors an Experian file and alerts users to suspicious activity over all three files. This service is available for a monthly fee, but Experian offers this service for a reduced rate during the first month.
For the other two bureaus, Credit Lock Plus is a credit monitoring service that can offer identity theft insurance, lock and unlock TransUnion and Equifax files. This program will also alert a user to any suspicious changes over all three bureaus and charges a monthly fee similar to Experian’s. For those looking for credit monitoring and a higher amount of identity theft insurance, it may be worth signing up for a paid service.
In the midst of a global crisis, protecting credit might not seem to be the top priority. But one thing none of us need right now is the new crisis of recovering your identity after theft. For those not planning to open a line of credit in the near future, requesting a credit freeze over all three bureaus might help prevent that. It’s also a useful and free tool that will protect your kids’ credit profiles until they are 18.
In situations that warrants active credit checks, a free credit lock service offered by TransUnion and Equifax might still help. For those with additional concerns about security, exploring one of the paid products that claim to offer more insurance and monitoring might be worthwhile.
If you want to entirely outsource the process, check out Forbes Advisor’s recommendations for identity theft insurance services. Paid or not, unlocking files with the tap of a button is a far more convenient way to add some security to sensitive information.
It is vital that we protect ourselves as much as possible, especially now. Keep wearing a mask and washing your hands, but also take some time to set up a credit freeze or credit lock today. Avoiding further catastrophe remains in all of our best inter