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Differences Between Credit Freeze and Credit Monitoring

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Lauren Ward

Lauren Ward

Updated May 26, 2021
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Differences Between Credit Freeze and Credit Monitoring; There are some differences between a credit freeze and credit score monitoring that you should know when managing a credit account. Learn more about both from Lantern.
It’s important to protect your credit and financial data, especially given the number of security breaches taking place each year. Both a credit freeze and credit monitoring can help—but in different ways. A credit freeze prevents new fraudulent accounts from being opened in your name, while credit monitoring alerts you to any suspicious activity in your existing accounts.  

What Is a Credit Freeze?

A credit freeze completely locks down access to your credit report. Creditors and other third parties can’t get your information. The goal of a credit freeze is to ensure that identity thieves can’t open fraudulent accounts in your name. If an application is submitted, the creditor trying to run the credit check won’t receive any information. As a result, the credit application would be denied. Having a credit freeze in place can reassure you that no one is likely to be opening accounts with your personal information. This can feel especially important if you know your data has been compromised. You’ll just need to remember to unfreeze your credit whenever you actually do need to apply for a credit card or loan. 

How Much Does a Credit Freeze Cost?

Both freezing and unfreezing your credit have been free since 2018. Before that, each state had its own regulations for the price of credit freezes. But the federal government stepped in to make it a free service nationwide. You can freeze both your own credit reports and those of your underage children for credit security purposes. Believe it or not, child identity theft is a real problem, and it often isn’t noticed until the child grows up and tries to apply for credit. 

How to Freeze Your Credit Score

You must freeze your credit separately with each of the three credit bureaus: Equifax, Experian, and TransUnion. It’s easily done through their websites online, or you can call each company’s toll-free number in order to freeze your credit. You’ll need to confirm your identity, which is usually done with your Social Security number. Once you start the freeze process, the credit bureaus will send you a PIN number. You’ll probably want to keep them in a safe place because you’ll eventually need those codes to unfreeze your credit when you’re ready. Note that even though you have a credit freeze in place, you may still receive prescreened credit offers. Additionally, your current creditors and any debt collection agency working for them can access your credit report while it’s frozen. 

How to Unfreeze Your Credit Score

Unfreezing your credit score is simple. Find the PIN for each credit bureau. Then go online or call the bureaus directly to unfreeze your credit report. You’ll need to do this before applying for any type of credit, like a credit card, mortgage, or auto loan. It should take less than an hour for each credit bureau to unfreeze your account.To help you save time, you can ask the creditor or lender which bureau it plans to use to check your credit. If it plans on checking only one or two bureaus, you can skip unfreezing your report from the one it won’t access. Once your application is complete, you can freeze your accounts again at no extra cost.

What’s the Difference Between a Credit Freeze and a Credit Lock?

These are actually two different services. A credit freeze is free and prevents any new account from being opened. A credit lock usually involves a fee, and it sends you an alert whenever someone tries to run a credit check on you. A credit lock is more like a form of credit monitoring (and more on that later). As to which is better, that depends entirely on what makes the most sense in your situation.

Does a Credit Freeze Impact Your Business Loan Applications?

Credit freezes apply to personal credit reports. That said, many small business loan application processes include a credit check on the owner. If you plan to launch and finance a new business, you’ll likely need to unfreeze your account if it’s frozen before you apply for good credit small business loans, startup business loans with bad credit, and unsecured business lines of credit for startupsOnce the application process is complete, you can freeze your personal credit again. Some business loans from traditional banks, however, can take weeks or even months to process. Find out from your loan officer when your credit score is likely to be pulled so you don’t slow down the process.

What Is Credit Monitoring?

There are several differences between a credit freeze and credit monitoring. Both offer credit security, but in distinct ways. While the freeze simply denies access to your credit report, credit monitoring typically sends you an alert when any of the following actions take place:
  • Your credit history is accessed
  • A new credit account is opened
  • A late payment is reported
  • A bankruptcy public record appears on your report
  • A legal judgment appears on your report
Being made aware when any of these issues arises helps you determine whether fraudulent activity has taken place that requires action on your part. 

Do I Need Credit Monitoring If I Have a Credit Freeze?

A credit freeze and credit monitoring are two separate services with different benefits. A credit freeze prevents new (and potentially fraudulent) accounts from being opened in your name. Credit monitoring, on the other hand, sends you a notification whenever there’s a change on your credit report. Typically, you receive real-time alerts and can find out if anyone is accessing your existing accounts. And if you have a bad credit score, you might consider monitoring your credit to help you track your score. The bottom line is that the service that’s likely to work better for you depends on what you need—something to prevent fraudulent accounts or something that alerts you to changes in your credit report. 

How Much Does Credit Monitoring Cost?

The cost of credit monitoring varies with each service provider. Typically, rates might vary between $8.99 and $38.85 per month. There are also free services such as SoFi Relay (available on desktop or mobile), which offers weekly credit score updates as well as money tracking and spending breakdowns at no cost.However, if your information has been compromised as part of a data breach, you can usually get free credit monitoring services from the company that experienced the breach. The free service typically lasts for a year. Some of the largest data breaches in recent years include Equifax, eBay, Marriott International, Target, and LinkedIn. Keep an eye out for physical mail or email updates from companies that you do business with, since they’ll typically send you notice of a breach and next steps to take. 

Does Credit Monitoring Impact Your Credit Score?

Credit monitoring doesn’t have a direct effect on your credit score. But you do gain more awareness of what's happening with your credit. Some credit monitoring services even offer to help you make better decisions by analyzing how your score will change based on the choices you might make. 

The Takeaway

Both a credit freeze and credit monitoring can be used to protect your identity and your financial health. A credit freeze is free and easy to turn off and on, so it’s a smart choice if you don’t plan on applying for any credit in the near future. Credit monitoring, on the other hand, is a service that often requires a fee but that can help you spot (and ideally prevent) fraud on your existing accounts. Consider at least accessing free offers if your data has been compromised in a security breach.When you are ready to apply for credit, you’ll need to turn off a credit freeze. But you’ll also probably want to find the best loan terms out there for your credit profile. Consider accessing offers from multiple lenders through Lantern Credit.
To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0421056

About the Author

Lauren Ward

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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