Credit Fraud and Your Credit Reports

Spotting ID theft through your credit profile.

How to identify fraud in your credit reports

Identity theft isn’t pretty – there’s the stress over misuse of credit in your name, the hassle of monitoring and/or canceling accounts, and the potential expense you can face from fraudulent charges.

Fact: In 2012, credit card fraud victims averaged direct losses of $1,003, although most of that expense was not out-of-pocket.

Luckily when fraudulent charges happen in your name, there are usually steps you can take to avoid footing those bills yourself. So while you may suffer “losses,” those are often shouldered by the financial provider or simply removed without an obligation for you to pay.

But it’s still a hassle! It takes time you don’t have, fighting charges you didn’t make. So what’s the solution? Use your credit reports to catch fraudulent charges that have been made, as well as to avoid new ones.

How your credit reports help you catch fraud

So let’s say a thief steals your identity. If they just stole account information for one card, then you can use your monthly statements to make sure extra charges aren’t being made.

But what if your personal information gets stolen? If something like your Social Security number gets compromised, then savvy fraudsters can take out all kinds of debts in your name –new debts you might not even know existed until a collector started calling.

This is where your credit reports come in handy. You can monitor your reports to see if any new accounts are opened in your name, or if there’s any suspicious activity on one of your accounts. Of course, if you want to keep an eye on it, you’re going to need more than the one free report you’re allowed to get every twelve months. Instead you need something like an ID theft protection service. This way, you can monitor the activity in your reports over a longer period of time.

Pop Quiz

How often do you think victims experience multiple counts/types of fraud on a single incident of identity theft?

a) 12% of the time

b) 28% of the time

c) 47% of the time

d) 63% of the time

Reveal Answer

Almost 1 in 2 ID theft victims will have multiple fraud attempts following a single instance of theft.

c) 47%

Return to question

Placing fraud alerts in your credit file

If you’re really concerned that your identity has been stolen, you can place fraud alerts in your credit reports directly with each credit bureau. There are three types of alerts that can be placed:

  1. An initial fraud alert is placed with one credit bureau (they notify the other two) and lasts at least 90 days.
  2. After 90 days, if you’re still concerned, you can place an extended fraud alert on your report for up to 7 years.
  3. There is also an active military duty alert that service members can use to make sure their credit isn’t misused while they’re away.

In any case, all pre-approved credit and insurance offers are stopped for two years. In addition, you have extra steps to confirm that you are you when you want to open any account.

Fact: Approx. 45% of the time, people find out about fraud because their creditor reports suspicious account activity.

The issue with fraud alerts

Obviously the point of credit report fraud alert is to prevent someone from opening a new account in your name. A side-effect is that you, yourself, will also have a harder time opening new credit in your name.

If you’re applying for a mortgage or car loan when a fraud alert is active on your account, make sure to tell the lender so they can be aware of potential roadblocks. One of the roadblocks is that the credit bureaus may call you at the home or office number you provided when the alert was placed. If you can’t be reached at that number, then you can face delays.

This call-before-credit-acceptance is also going to make it impossible to apply for credit when you’re standing in a store. So let’s say you’re in a furniture store and see a bedroom set that you can’t live without. Even better, the store has a no-interest until X-date financing offer that’s just too good to miss.

Too bad. Since you’re standing in the store, they can’t contact you at home to make sure you are you. So more often than not, you won’t be able to take advantage of offers like those on the spot.

Of course, once you’ve placed a fraud alert on your credit reports, you can choose to remove it at any time. So once you’re fairly certain that you’re not going to have any more issues, go ahead and remove the alerts to make your life easier.

Article last modified on February 20, 2019. Published by, LLC .