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Tata Capital > Blog > Personal Use Loan > What Is The Difference Between Credit Freeze And Credit Lock?

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What Is The Difference Between Credit Freeze And Credit Lock?

What Is The Difference Between Credit Freeze And Credit Lock?

The digital revolution has made our lives simpler, but it is not without drawbacks. Cyber fraud has prompted several companies to use cyber breach management systems in a bid to combat the threat. Credit freeze and credit lock are two such security measures that prevent credit history theft/hijacking by blocking access to credit reports. They safeguard the credit reports against a data breach or unauthorised access, preventing a fraudster from starting a new credit bank account. The article highlights the topic of credit lock vs. credit freeze, and all related information.

What is Credit Freeze?

A credit freeze, also termed a security freeze or frozen credit, is a fraud prevention strategy in which a credit bureau refuses to share a consumer's credit record with outsiders. Frozen credit is frequently requested by people who believe their credentials have been stolen. To reduce the harm caused by the theft, victims often want to freeze their credit to prevent criminals from accessing their credit information to create new accounts or make purchases. No financial companies or intermediaries can view a user's credit card data until the credit freeze is removed.

What is Credit Lock?

A credit lock is a strategy to prevent lenders from viewing personal credit reports. Anyone applying a credit lock might lock and unlock their credit report using a mobile device. Users can even do it without recalling their card's identification number (PIN).

Therefore, if a scammer attempts to create a credit report account in one name, the credit lock protects him. It should be noted that any reputable credit bureau will assist anyone in establishing a credit lock. A user ID and password are required to control the credit lock via an app.

How to Freeze/Unfreeze Credit Details

Step 1: Request a freeze from each main credit reporting agency (often CIBIL).

Step 2: Fill out the contact information.

Step 3: Obtain a PIN to be used later to thaw/unfreeze the credit card.

Step 4: Change the credit information to freeze and unfreeze.

If users cannot provide a PIN, the freeze can still be removed. However, additional identification verification will be necessary. Credit bureaus freeze accounts within 24 hours after receiving a request and unfreeze them within an hour. Freezing personal credit information is free of charge under federal legislation.

How to Lock and Unlock Credit Details

Step 1: Know the credit bureau applications form or go to their websites to set up a credit block.

Step 2: Enter the username and password to log in.

Step 3: With a single tap, lock and unlock the credit lock.

Credit Block allows anyone to manage access to your credit reports directly using smartphone applications or a secure website. This is a simpler and more temporary method of protecting sensitive data with no delays for a limited time. When a user wants a lender or creditor to check their credit, credit locks make it easy to unlock the data.

Differences between Credit Freeze vs. Credit Lock

 TopicsCredit Freeze Credit Lock
Access modeTo get access, such as placing or removing a credit freeze, a request must be filed to the relevant credit agency.Instant access to toggle on and off credit lock via mobile application.
Reasons to activate●     When users feel their credit files and personal details have been hacked.
●     When there is a high risk of exposing personal information.
Credit locks are used as a preventative measure to safeguard the credit report and sensitive information.  
Time required●     The credit bureau will activate the account credit freeze within 24 hours of receiving the registration via phone or online.
●     Deactivation takes one hour and needs a pin to unlock.  
Immediate activation and deactivation using a trustworthy smartphone app or website.
ProtectionPin protection and Federal Law-based.User ID and Password protection
Application ProcessCredit freeze application procedure is complex.Simple application process

Credit Freeze vs. Credit Lock: Which is Better?

Credit locks are more convenient and user-friendly than credit freezes. In most circumstances, though, freezing credit is a better approach to protect yourself against fraud.

  • Credit freezes are governed by federal legislation. This offers an advantage in terms of security. On the other hand, credit locks are controlled by a contract between the user and the credit bureau(s). Credit lock contracts might have unfavourable terms and circumstances, such as arbitration provisions that preclude consumers from joining a lawsuit. Furthermore, if a fraudster acquires access to your credit file while the freeze is in effect, you will be better protected against responsibility.
  • Credit freezes are entirely free and a more cost-effective alternative and give better protection than pricey credit locks (one must pay a monthly charge).
  • In contrast to the time-consuming credit freeze technique, a credit lock can be activated and deactivated instantly. Thus, if users need to apply for loans and other credit frequently, a credit lock is a better option than a credit freeze, even if a credit block is a premium service.

Final Word

Blocking or freezing credit details has the same effect - it provides an additional layer of security between users and identity thieves. However, keeping track of personal credit information and taking action to keep oneself secure is critical. Credit locks will significantly improve credit access data if anyone opens new credit. Credit freezes, on the other hand, are the most cost-effective and secure choice. Checking and analysing the credit report regularly will help users catch any fraudulent transactions before any harm is done.

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