A recent Federal Trade Commission report reveals that consumers reported losing more than $10 billion to fraud in 2023. This marks the first time that fraud losses have reached this level, which is a 14% increase over reported losses in 2022.
Since fraud and identity theft are on the rise, monitoring your credit report and protecting your personal information is more important than ever.
In this guide, we’ll explore the telltale signs of fraud that could appear on your credit report and provide you with actionable steps to fix them. Recognizing these signs and taking action as needed can safeguard your creditworthiness and sensitive financial information.
1. A New Account Shows Up on Your Credit Report
One sign that scammers may be up to something is when a new account appears on our credit report without your knowledge or permission. This could mean that someone illegally accessed your personal information and used it to open an account in your name.
To address this, contact the three credit reporting agencies (Equifax, TransUnion and Experian) and inform them of the mistake (also known as a dispute). Then immediately reach out to the creditor or financial institution involved to report the fraudulent activity and request the account be closed and removed from your profile.
Additionally, consider placing a fraud alert or security freeze on your credit file to add an extra layer of protection against potential fraudulent activities.
[Fraud Alert vs. Credit Freeze: Which Is the Right Choice?]
2. A New Inquiry Appears on Your Credit Report
You should also be leery if you notice a new inquiry on your credit report that you did not initiate. Unauthorized inquiries may indicate someone attempting to open accounts or apply for credit in your name.
As mentioned above, you’ll need to act quickly to ensure fraudsters can’t steal any more of your information and do more damage. As you would in the case above, contact the credit reporting agencies to report the unauthorized inquiry and request further investigation.
3. An Unfamiliar Address Is Associated With Your Identity
Another red flag on your credit report is an unfamiliar address associated with your credit profile. If you come across an address that you have never lived at or have no connection to, it could indicate that someone has used your personal information to change your account details without your authorization.
This is especially concerning as it could be an attempt to access or divert sensitive financial information from your actual address. If you notice an unfamiliar address, contact the credit reporting agencies and notify them of this suspicious activity.
4. You’ve Got Collections or Charge-Offs
Another sign that could indicate potential fraud on your credit report is the presence of collections or charge-offs. Collections refer to accounts handed over to debt collectors due to nonpayment, while charge-offs occur when a creditor considers a debt unlikely to be collected.
These entries on your credit report could mean you’ve missed payments on accounts that you may not even know exist! If this is true, you’ll need to get to the bottom of the matter quickly since these negative entries are extremely damaging to your credit score.
“In some cases, accounts may not report to their credit until after the account is in default — this is typical in cases of medical identity theft, for example,” says Al Pascual, CEO and co-Founder at Scamnetic, a scam protection company.
Pascual says, “It is also important for (consumers) to check for any items on their credit that are reported as being in collections. In either case, the consumer may receive mail or phone calls from an unrecognized lender or collections agency, which is another telltale that fraud may have occurred.”
Contact the credit reporting agencies, original creditors and, if necessary, the collections firm to remove any fraudulent accounts from your credit history.
5. Your Credit Score Drops Suddenly
A sudden drop in your credit score could also mean your identity has been compromised. While there can be many reasons for your credit score to drop, it can also indicate potential fraud.
Fraudsters may employ tactics to keep their activities under the radar by opening a line of credit, making timely payments and ensuring that your credit utilization remains the same.
But at some point, they may overplay their hand by neglecting to pay bills or running up your credit utilization ratio, causing a sudden drop in your credit score.
What Can I Do if I Suspect Fraudulent or Incorrect Information on My Credit Report?
File a Report with Your Local Police and the FTC
If you suspect you’ve been a victim of identity theft and fraud, you’ll need to file a police report (sometimes called an incident report). This step is important because creditors may need to investigate the matter and remove negative information from your credit report.
You should also report identity theft to the Federal Trade Commission at www.IdentityTheft.gov.
The FTC monitors fraud cases on a broader scale to spot trends and warn consumers accordingly. By registering the incident with the FTC, you can also access resources and guidance to help you create a plan for recovery and take necessary steps to mitigate the impact of identity theft.
Get a Free Copy of Your Credit Report
By law, you are entitled to a free copy of your credit report each year. Go to www.AnnualCreditReport.com to get a copy of your report from each credit reporting bureau. If you see suspicious activity, you can contact each credit bureau to address it.
Contact All Three Credit Bureaus
Contact all three credit bureaus and dispute any information that appears fraudulent or incorrect. You can communicate with Equifax, Experian and TransUnion via phone, website or mail to dispute items that appear on your credit report.
You can also place a fraud alert on your profile with each bureau.
According to the FTC’s IdentityTheft.gov website, “A fraud alert is free. It will make it harder for someone to open new accounts in your name. When you have an alert on your report, a business must verify your identity before it issues new credit in your name. You can renew the fraud alert after one year.”
Freeze Your Credit
Also, it might be a good idea to freeze your credit to prevent further unauthorized access. You can control how long the freeze is on your credit and unfreeze it at any time.
A credit freeze is a proactive step in protecting your identity and preventing unauthorized access to your credit report. By placing a credit freeze, you restrict access to your credit information, making it difficult for identity thieves to open new accounts in your name without your permission.
Contact Individual Creditors and Debt Collectors
From here, you should begin contacting individual creditors to inform them of the fraudulent nature of the account(s) and ask them to freeze the activity or close it immediately. You may need to provide proof of your identity theft claim by furnishing your police report. Ask them to open an investigation, release you from liability and remove adverse information from your credit report.
[Read: How to Negotiate With Debt Collectors]
Step up Security
You should change your passwords and enable two-factor authentication with online accounts where possible. Make sure your passwords are strong and that you don’t share them with anyone.
If you’ve too many to track, it might be time to use a password manager, a software program which helps you generate strong passwords and store them securely.
Michael Bruemmer is the head of global data breach resolution at Experian. He recommends, “Being cautious when using public Wi-Fi. Fraudsters can target you through unsecured Wi-Fi networks” and reminds people to “Never scan QR codes unless you have verified that it is safe.”
Monitor Your Credit
It’s important to monitor your credit regularly to detect any suspicious activities or signs of identity theft. Keep a close eye on your credit report and check for any unfamiliar accounts, inquiries or changes.
If you’d like to beef up this effort, consider getting identity theft insurance, which can help you in the case of identity theft or fraud. This service may cover financial losses resulting from identity theft, resolution support, credit monitoring and more.
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5 Signs of Fraud that Could Show Up on Your Credit Report ? and How to Fix Them originally appeared on usnews.com
