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How a Credit Freeze, Credit Lock, or Fraud Alert Could Deny You Credit

Author: Sean P. Egen


Obstacles created by credit freezes, locks, and fraud alerts

Being denied for a credit card or loan because of what’s in your credit reports can be frustrating. But imagine being denied credit not for what’s in your credit reports but because a potential creditor couldn’t even access your credit reports.

This is unfortunately the case for many people who’ve placed a credit freeze, credit lock, or fraud alert on their credit reports—unless they remember to remove these security measures prior to applying for new credit.


Credit Freeze vs Credit Lock

A credit freeze and credit lock both restrict access to your credit reports, making it more difficult for identity thieves to open new accounts fraudulently in your name. New being the operative word, because creditors with whom you already have accounts will still be able to access your credit reports.

The primary difference between a credit freeze and credit lock is that a credit freeze’s promise to protect access to your credit reports is guaranteed by federal law. A credit lock, on the other hand, is an agreement between you and a credit reporting agency that’s governed by terms dictated by the credit reporting agency.

Another difference between the two is that you can put a credit freeze in place, and remove it, in all 50 states free of charge. A credit lock may or may not be free, depending on the credit reporting agency.


Removing a Credit Freeze or Credit Lock

Regardless of which type of roadblock you’ve put in place, if you’re actively seeking credit, you’re going to want to remove it or risk being denied because creditors can’t access your credit reports. And if they can’t see how you’ve done managing your past and current credit, chances are slim that they’ll blindly extend new credit to you.

A credit lock holds an advantage over a credit freeze when it comes to ease of removal. A lock can be instantly lifted online or via a mobile app and does not require a PIN (personal identification number) to do so.

When you request a credit freeze, you may be required to establish a PIN at that time. As of this writing, only Experian® still requires a PIN to lift a freeze, while Equifax® and TransUnion® allow you to unfreeze your credit reports without a PIN simply by creating an account.

By law, a credit reporting agency must implement an online or telephone request to unfreeze your credit report within one hour of your request. Requests made via mail must be implemented by an agency no later than three business days after receiving your written request.

It’s wise to remove any credit freezes or locks at least a few days in advance of when you plan to apply for new credit. This should ensure that they’ve been fully removed prior to potential creditors attempting to access your credit reports. You don’t have to unfreeze or unlock your credit reports for very long; once a creditor has pulled your reports, you can immediately put any freezes or locks back in place. And if you know a creditor is only going to check with one or two credit reporting agencies, you don’t have to unfreeze or unlock all three.


Prescreened Offers Don’t Mean Potential Creditors Can Access Your Credit Reports

Don’t mistake the fact that you’re receiving prescreened credit offers as evidence potential creditors have access to your credit reports. Credit freezes and locks do not prevent prescreened offers from being sent to you. A prescreened offer is based on a soft inquiry, not a hard inquiry, which will be made when you formally apply for the credit card. Once you actually apply for the card, if you have a credit lock or freeze in place, the card issuer shouldn’t be able to access your credit reports.


Fraud Alerts Can Also Complicate Getting Credit

Unlike a credit freeze or credit lock, a fraud alert does not block prospective creditors from accessing your credit reports. It does, however, warn potential lenders that you may have been a victim of identity theft and requires them to verify your identity prior to issuing you credit.

While a fraud alert won’t prevent credit from being granted to you, it can prevent it from being granted immediately, depending on the circumstances. For example, if you’re applying for a Credit One Bank credit card online, and there’s a fraud alert on your credit reports, your application will be declined. But if you’re applying for an auto loan at a car dealership and your fraud alert comes up, they can verify your identity right then and there. In general, though, if you’re looking to be approved for credit on the spot, it’s advisable to first remove a fraud alert.


Getting approved for credit can be tricky enough without putting obstacles in your way. So, if you’re getting ready to actively apply for credit, be sure to remove any credit locks, credit freezes, or fraud alerts that could stand in the way of a prospective creditor saying “yes.”


Ready to start applying for credit today? See if you Pre-Qualify for a Credit One Bank credit card. It takes less than a minute and won’t harm your credit score.


About the author:

Sean P. Egen

After realizing he couldn’t pay back his outrageous film school student loans with rejection notices from Hollywood studios, Sean focused his screenwriting skills on scripting corporate videos. Videos led to marketing communications, which led to articles and, before he knew it, Sean was making a living as a writer. He continues to do so today by leveraging his expertise in credit, financial planning, wealth-building, and living your best life for Credit One Bank.

This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.