Credit Monitoring vs. Credit Freeze - InCharge Debt Solutions

Credit Monitoring vs. Credit Security Freeze: Which Is Better?

Find out if it is better to monitor your credit or freeze your finances

The number of online security breaches is so staggeringly high – more than 5 billion records exposed in 2019 – that the question of whether your private information has been hacked is no longer debatable.

It has!

Breaches at Facebook (540 million users affected); Capital One (100 million); First American Corp. (850 million); Verifications (982 million email addresses leaked); Elasticsearch (622 million unique email addresses and phone numbers breached) are just a few of the companies that put private information up for grabs in 2019.

The real question is what can be done to limit the damage when your name, address, social security number, account numbers, etc. is floating unprotected through cyberspace?

A credit freeze or credit monitoring are two options to restrain cyber criminals from wreaking havoc with your finances.

A credit freeze is stronger than credit monitoring, but also causes more problems when you must give lenders access to your report to obtain a loan.

A credit freeze blocks the release of information from your credit report without your approval. It’s done to prevent thieves who’ve stolen your identity from using that information to open credit card accounts or gain access to lending opportunities.

Credit monitoring, sometimes referred to as “fraud alert,” watches activity on your credit report and notifies you when unusual charges appear.

Free security freezes and credit monitoring are available and should be placed at all three major credit reporting bureaus, Experian, Equifax and TransUnion, in order to be effective.

Freezing your credit or doing credit monitoring won’t assure you are completely safe from cyber crime, but each provides a layer of protection.

Credit Freeze

A credit freeze effectively locks down your credit report, which safeguards your personal information, but can put a crimp in your ability to borrow or establish lines of credit.

The important thing is that banks, credit card companies, online lenders – and scam artists! – will be denied permission to see your credit report, unless you authorize them.

The federal government passed a law in 2018 that allows consumers to freeze and unfreeze their credit files with each of the credit bureaus for free. You also can get a free freeze for your children under the age of 16 and if you’re the guardian or have power of attorney over a person, you can get a freeze on their accounts as well.

If you are looking for a loan of any kind, you can give the lender access to your account by “thawing” or “unfreezing” your account.

If you put a freeze or thaw on the account by phone, it should go into place within one hour. If you do so by mail, allow three days for the action to take place.

How to Freeze Your Credit

All three credit bureaus allow you to freeze and unfreeze your credit file for free, but remember the credit freeze is free, but there could be a service fee if you choose a credit lock.

Here is how to navigate the process at each of the credit reporting bureaus:

  • Equifax: Credit freezes can be started online or through certified mail. You will receive a PIN number that can be used to freeze and unfreeze your credit information. Call Equifax at (800) 349-9960, visit the company’s website or write the company at: Equifax Security Freeze, P.O. Box 105788, Atlanta, GA 30348.
  • Experian: A credit freeze can be initiated online, via certified mail or by calling (888) 397-3742. Fees vary by state and a reduced fee is available for senior citizens. Freezes can be removed online, by calling (888) 397-3742 or by writing Experian, P.O. Box 9554, Allen, TX 75013.
  • TransUnion: As with the other two bureaus, a freeze can be started online or by calling the company at (888) 909-8872. Fees vary by state and a cost reduction is available for seniors. A freeze can be cancelled or suspended by calling the company phone number, visiting its website or writing TransUnion LLC, P.O. Box 160, Woodlyn, PA 19094.

How to Unfreeze Your Credit

The easiest way to unfreeze your credit report is by phone. Call each of the credit reporting bureaus and notify them that you want the freeze lifted. It should go into effect with one hour.

If you want to put a security freeze back on the account, use the same method and, again, it should go into effect within one hour.

Does a Credit Freeze Affect My Credit Score?

A credit freeze has no effect on your credit score, regardless of how many times you freeze or unfreeze your account. Remember, however, that if you are looking for a loan, you must unfreeze the account to allow lenders access, then go back and refreeze the account after you receive the loan.

Credit Lock vs. Credit Freeze

A credit freeze and credit lock do essentially the same thing – blocking access to your credit report to prevent identity thieves from opening accounts using your name – but there is a slight difference.

A credit freeze stops any new accounts from being opened in your name and, by government order, is a free service.

A credit lock has the added feature of offering alerts when someone attempts to access your credit report. There could be a charge for the credit locking service.

Credit Monitoring

Credit monitoring is a service offered by companies who track activity reports gathered by the three major credit reporting bureaus (Experian, TransUnion and Equifax) and watch for suspicious activity.

Credit monitoring is sometimes called fraud alert because the purpose is to notify the consumer when fraudulent activity has occurred with one of their credit accounts. That activity could be unusually high spending; changing your address or opening a new credit card account. If there is a sign of suspicious activity, the credit monitoring service alerts the consumer to signs of fraud.

How to Monitor Your Credit

Many companies offer plans to monitor your credit or attempts to use your Social Security number to obtain it, but there often is a charge for something you can do yourself for free.

Breaches have become so common that many companies are offering free credit monitoring to customers affected by the breaches. If your information was part of a security breach involving one of the major companies, contact the company that was breached and see if they are offering the service free.

Otherwise, you will pay for credit monitoring, probably from companies that offer identity-theft protection plans, places like IdentityForce, CreditKarma and PrivacyGuard.

The three national credit bureaus – Experian, TransUnion and Equifax – also offer credit monitoring that includes updates of your credit score and status of accounts.

Most people assume that paying a third-party to do the monitoring is the only way to detect possible fraud. They never consider doing it themselves – for free.

The DIY method starts with ordering a free credit report from each of the three major credit reporting bureaus once a year and examining the report to spot unusual activity such as credit cards that you didn’t sign up for.

The information on each report usually is the same so spacing the credit reports out over the whole year – one report every four months – should help you spot fraudulent activity.

Even if you don’t discover a fraud, you might detect errors in your reports that need to be corrected. You can also monitor the information that the bureaus collect.

If you see unauthorized posts, contact the bank, brokerage or credit card company to find out what happened, and then freeze or close your account and request a new card.

If you still have problems managing your debts through reviewing credit reports, you could contact a nonprofit credit counseling agency and ask for more help.

Does Credit Monitoring Affect My Credit Score?

Credit monitoring is the equivalent of a “soft inquiry” on your credit report and soft inquiries have no effect on your credit score. Thus, there should be no hesitation in monitoring your credit report.

Credit Monitoring

For a yearly or monthly fee many companies claim that they will protect you from identity theft brought to you by Money Minute.


Sources

Tatham, M. (2018, September 24) How to Get a Free Credit Freeze. Retrieved from https://www.experian.com/blogs/ask-experian/how-to-freeze-your-credit-report-for-free/

Herron, J., Shell, A. (2018, September 21) Freezing your credit is free in all states under a new law following Equifax breach. Retrieved from https://www.usatoday.com/story/money/2018/09/21/equifax-free-credit-freeze-new-law/1377815002/

Silverstein, J. (2019, April 4) Hundreds of millions of Facebook user records were exposed on Amazon cloud server. Retrieved from https://www.cbsnews.com/news/millions-facebook-user-records-exposed-amazon-cloud-server/

N.A. (2019, November 20) All Data Breaches in 2019 – An Alarming Timeline. Retrieved from https://selfkey.org/data-breaches-in-2019/

N.A. (2018, September 21) Free credit freezes are here. Retrieved from https://www.consumer.ftc.gov/blog/2018/09/free-credit-freezes-are-here

N.A. (ND) 8 Facts About Security Freezes. Retrieved from https://www.equifax.com/personal/education/identity-theft/8-facts-about-credit-freezes/

N.A. (ND) Credit Freeze. Retrieved from https://www.transunion.com/credit-freeze

About the author

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.