Equifax breach: Should you lock your credit?
Equifax “is finally taking real steps to help consumers” affected by its catastrophic data breach, said Jeff John Roberts in Fortune.com. Nearly a month after the credit agency revealed that hackers had gained access to sensitive financial data, including Social Security numbers, for as many as 143 million Americans, the company’s interim CEO announced last week that it would offer consumers a lifetime of free credit locking beginning Jan. 31. Credit locking can help protect your accounts by preventing fraudsters from opening new accounts in your name, but consumer advocates are already “concerned over the unknowns,” said Katie Lobosco in Money.com. While a credit lock is very similar to a credit freeze—both can be unlocked or thawed so you can apply for a new credit card or loan—locks have fewer legal protections. It’s not yet clear, for instance, if enrolling in Equifax’s new service “could limit your rights to sue” the company later.
Given the choice, “a credit freeze is better than a credit lock,” said Octavio Blanco in ConsumerReports.org. Credit freezes are typically covered by state laws, so you are “protected from any financial liability.” You’ll probably also save money with a freeze. Equifax and TransUnion offer credit locking for free, but “locking down only two of the three main credit reports isn’t enough,” and Experian’s locking service can cost up to $24.99 a month. By contrast, thawing a frozen credit report is capped by law at $10 per instance, so even if you need to apply for new credit repeatedly, the cost will still “likely be less than paying Experian’s monthly fee indefinitely.” Some will argue that locking is more convenient than freezing, said Ron Lieber in The New York Times. Credit locks can be lifted instantly from a smartphone app, whereas thawing a freeze can sometimes take several days. “That scares plenty of people off,” but I’ve had my credit report frozen for a decade and “have always found the thawing to be instantaneous” and the process painless.
Overlooked in all of this is the fact that locking or freezing your credit “will not prevent the most common type of identity theft,” said Lauren Lyons Cole in BusinessInsider.com. Credit locks and freezes prevent only new accounts from being opened in your name, which affects just 4 percent of identity theft victims each year. Far more common is theft and fraud involving current credit cards and bank accounts. To protect your finances, “monitor your accounts daily or weekly” and use secure passwords and two-step verification whenever possible. That sounds time-consuming, but the truth is, “Equifax just changed the rest of your life,” said Liz Weston in the Associated Press. There are just so many ways that “bad guys can use the information” that has been stolen to wreak havoc in your finances. “As long as your Social Security number is the key to your identity, you’ll need to be on guard.”