Credit monitoring vs. credit freeze: Which is best for protecting your credit?

Your credit score is a big factor in getting approved for any type of credit, be it a personal loan, mortgage or credit card. Not only that, but a higher credit score can save you money by helping you secure a lower interest rate on these products.

That's why it's important to protect your credit score from fraud and other outside interference. It's difficult enough to build a good score without having to worry about someone else tanking your number and making your finances tougher to manage.

Two useful tools for keeping your credit safe are credit freezes and credit monitoring services. Understanding how these protections work, and their limitations, can go a long way in helping you keep your credit pristine.

Credit monitoring is a service you sign up for that alerts you when there is activity on your credit report, such as a hard inquiry, new account opening, changes to an existing account or an address change. Credit monitoring services may also include additional protections such as scanning the dark web or identity theft insurance.

Free credit monitoring services can get the job done, but these services are typically tied to a specific bank and usually don't monitor all three major credit bureaus. For more robust credit monitoring, you can use paid services that keep an eye on your credit reports from all three credit reporting companies and provide alerts for a wider range of activities. A paid service typically costs anywhere from $9 to $40 a month.

Credit monitoring helps you quickly identify suspicious activity on your credit report and makes it easier to keep your credit history free from errors. But it won't lock your credit file or keep accounts from being opened in your name.

Here are some of the best credit monitoring services with triple-bureau protection:

A credit freeze, sometimes called a security freeze, blocks third parties (banks, utility companies, etc.) from accessing your credit report. Since a credit review is required to open many types of accounts, a credit freeze prevents you (and anyone else) from opening an account in your name.

This makes a credit freeze a powerful tool in fighting fraudsters and protecting yourself from the consequences of data breaches and identity theft. 

By law, it's now free to create and lift a credit freeze with the three major credit bureaus: Experian, Equifax and TransUnion. But you'll need to set up and manage your freeze with each agency individually.

You can easily freeze or thaw your credit reports online or over the phone.

How to request an Experian credit freeze

You can create and manage an Experian credit freeze online or by calling 888-397-3742.

How to request an Equifax credit freeze

Equifax lets you create and manage a credit freeze online or by calling 800-349-9960.

How to request a TransUnion credit freeze

You can create and manage your TransUnion credit freeze online or by calling 888-909-8872.

Unfreezing your credit report

When you thaw a credit freeze, you can either permanently remove the freeze or lift it temporarily by choosing the dates to start and end the credit thaw. A temporary thaw is useful if you're applying for a mortgage or a credit card or any other type of credit and know lenders will need access to your credit reports. 

Freezing your credit or setting yourself up with a credit monitoring service both accomplish different tasks, and you don't have to choose one over the other. 

Freezing your credit reports is a bit more tedious than setting up a credit monitoring service since you'll have to apply a freeze at each credit bureau individually. You'll also have to unfreeze each credit report separately. But you get protection against having accounts fraudulently opened in your name, something that credit monitoring services can't provide.

With a credit monitoring service, you'll be able to keep tabs on your credit reports, which help you keep them free from errors. And if you get identity theft insurance included with your subscription, you'll be protected in the worst-case scenario.

Will a credit freeze or a credit monitoring service lower my credit score?

Freezing your credit or using a credit monitoring service will not lower your credit score. Both of these tools have no direct impact on your score, which is calculated based on your payment history, age of accounts, credit usage and other factors.

However, a credit freeze or credit monitoring subscription can indirectly help you improve your credit score over time. Locking your credit report limits the number of hard inquiries on your report, each of which has a (small) effect on your credit score. A monitoring service will also help you spot potential score-lowering errors on your credit report and quickly dispute them.

How can I see what's on my credit reports?

By law, you can get a free credit report from each of the major reporting agencies once every 12 months. In response to the Covid-19 pandemic, all three credit reporting companies are offering free weekly access to your credit reports through at least December 2023. To see your complete report visit AnnualCreditReport.com.

Using a credit freeze can prevent hackers and scammers from opening new lines of credit or new accounts in your name. And a good credit monitoring service can help you keep track of more innocent errors that can appear on your report.

While neither tool can completely protect you from every type of fraud or identity theft, they both can help limit the potential negative impact of having your information stolen.

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