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The New Free Credit Freeze Rules: What You Need to Know

Is it time to rethink the way you protect your credit file?


(This article previously appeared on NerdWallet.com.)

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 — just became free for everyone by federal law starting Friday, Sept. 21. Fraud alerts, which always have been free, have been extended from 90 days to a year. Credit locks, a product promoted by the credit bureaus, 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 instead may want locks for the convenience; they can be done using the credit bureaus’ smartphone apps.

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 as freezes: They make your credit records off-limits to potential lenders and credit card issuers.

Here’s a breakdown:

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
  • Offered 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 (taking seconds)
  • Relatively quick and easy to regain access to if you forget a password

Another issue is legal rights, depending on the credit bureau and what service you use.

With credit locks at Experian and TransUnion, you give up the right to sue the companies in class-action lawsuits. Freezes and Equifax’s lock don’t require you to sign such a waiver.

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.

Fraud Alerts: Added Security

Both Wu and Ulzheimer 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.

Ulzheimer has fraud alerts in addition to his freezes and lock. “People tell me it’s redundant, like putting a safe inside of a safe,” he says, but he likes having the extra protection.

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By Bev O'Shea
Bev O’Shea is a personal finance writer for NerdWallet. Her work has been featured by USA Today and The Associated Press.

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