Color of Money: Equifax breach gives us a deeper look into credit bureaus
WASHINGTON -- If nothing else, the massive Equifax data breach should broaden our knowledge of how the credit bureau world works.
For example, until this cybercrime exposed 143 million consumers to identity theft, many people didn't realize they could freeze their credit file to block new lenders from seeing their credit reports if they suspected they had been victimized. This action helps prevent thieves from opening credit in someone else's name.
In response to the breach, Equifax is now offering a year of free credit monitoring through its identity-theft prevention service, TrustedID Premier. The service gives you the option to freeze or lock your credit file with Equifax, but note that it won't do the same for the other two major bureaus, Experian and TransUnion, or for the lesser-known Innovis.
What caught my attention was a note from Equifax that you can either lock or freeze your file, but you can't do both.
So what's the difference between the two?
The difference apparently comes down to the ease and speed with which you can open and close your credit file. The bureaus make locking sound like the better choice, but is it?
Although the freeze is separate, the bureaus have created a lock as part of a service package that includes credit monitoring and other things meant to prevent or detect identity theft. Frankly, I'm still confused at why there's a need for a lock. It's just one more thing for us to figure out about a system that is already pretty opaque.
Experian's "CreditLock" is a feature in its "CreditWorks" service, a monthly subscription product that offers credit monitoring and gives access to your FICO credit score online or on your mobile device.
In the description of its TrustedID credit lock service, Equifax says that requests from accountholders to lock or unlock a credit file are fulfilled within 24 to 48 hours.
TransUnion, meanwhile, offers a lock through its free "TrueIdentity" product, which also has its own app.
"The TrueIdentity app includes a simple finger-swipe locking tool, instant alerts, and access to TransUnion credit information," David Blumberg, senior director of public relations for TransUnion, wrote in an email.
Blumberg said consumers can unlock their accounts free of charge by using the app or going to TrueIdentity.com.
But free doesn't come without a catch.
"You understand that in order to receive the free products, you must agree to receive targeted offers by TransUnion and other third parties," says the language in the service agreement for TrueIdentity.
Most state laws require a credit freeze submitted by mail to be lifted within three business days. But it can be much shorter -- as little as 15 minutes -- when done electronically.
I was still not sure there was a big-enough difference for me to pay a subscription fee or subject myself to upselling, so I asked Brian Krebs, founder of the cybersecurity site Krebsonsecurity.com, what he would recommend.
"Do the freeze. Forget about the lock," Krebs said in an interview.
He thinks the credit bureaus are trying to steer people to lock products, which he feels might not be as tight as a freeze. The fine print on some lock services could allow for access to people's files that a freeze might not, he said.
One of the reasons some might have balked at getting a freeze is the delay that unfreezing can create in getting credit approved. The speedier credit locks could seem to be an answer to this concern. The question you have to ask is: What's that convenience worth?
And I'm left wondering why the bureaus don't provide the same ease for a credit freeze.
Before you decide what to do, read up on your state's credit freeze laws and learn what it costs to place and lift a freeze. (You'll also see it referred to as a security freeze). Go to consumersunion.org and search for "Consumers Union's Guide to Security Freeze Protection." Be sure to read the FAQ too.
Unless you are planning on frequently applying for credit, why would you need to do much locking and unlocking of your credit file?
If you go with a freeze, you'll have to remember to give yourself some time to allow an unfreezing of your file to take effect. I'll concede that freezing may take more effort and time, but that might not be such a bad thing.
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