What is Credit Fraud?

October 17th, 2020 by
What is Credit Fraud?

Photo: Negative Space via Pexels

Credit Fraud is the most widespread form of Identity theft. It is the crime of using someone’s personally identifiable and financial information to open loans and apply for credit cards.

These fraudsters rack up debts under those accounts without any intent to repay the loans, leaving the person whose identity they stole responsible. 

There are 20 types of credit fraud, says Experian, one of the consumer credit reporting agencies making up a part of the credit bureaus. Any of these types can be used in various combinations to steal someone’s identity. These range from account takeover fraud to medical identity theft.

RELATED: Experian, Equifax, TransUnion Offering Free Weekly Credit Reports Through April 2021

The victim of the credit fraud will normally end up with debts against them. This is generally a long process to sort out but, don’t fret; it can be done. Keep in mind, this can impact your credit score and future lending opportunities while it is being investigated.

Ways to prevent credit fraud and identity theft:

  • When shopping online look for the lock in the browser bar (address bar) to make sure that the vendor is encrypted. Avoid using public Wi-Fi when dealing with any personal data, such as shopping online and using credit cards, or accessing your bank accounts. These can easily be monitored and information obtained by thieves.
  • Avoid mentioning any account numbers or any other important details while out in public. If you need to pay something over the phone or gain access to an account, use the keypad to enter numbers when prompted or wait until you are in a more secure environment to deal with them.
  • Shield your account Personal Identification Number (PIN), when either using ATMs or in at the cashier. Another option is to use your smartphone to pay for items using contactless shopping, like Apple Pay.
  • Keep tabs on who is asking for your personal information. Some scammers disguise themselves as banks, credit card companies, and even the Internal Revenue Service. For example, if you receive a text message or an email asking to click a link to their website or call them on a number provided, verify the information with your bank or credit card company by using the number on the back of the card or on your monthly statement. 

Keep an eye on any suspicious or unauthorized activity:

  • Checking monthly bank or credit card statements to make sure you recognize all of the transactions. If there are any uncertainties, call the card issuer to investigate further.
  • Check to see if any credit checks have been taken out in your name. If there is something you don’t recognize, contact the creditors and file a report with local law enforcement agencies.

If you believe you are the victim of credit fraud, take action as quickly as possible:

  • Contact the lender if unauthorized activity has appeared and ask them to begin investigating.
  • Report suspected activity to law enforcement so they can begin an investigation, also. This can be done via the United States Federal Trade Commission’s website, which will help find the right organization to give you support. You can also go to the Federal Trade Commission’s IdentifyTheft.gov to report identity theft, as well. 
  • Contacting the National Credit Bureaus (Equifax, Experian, TransUnion) to make it difficult for scammers to secure credit in your name.

Credit fraud impacts thousands of people each year, including businesses and consumers. 

RELATED: What to look for on your credit report

It’s important to limit the amount of important information and safeguard any personal data, and notify the proper organizations of anything suspicious on your accounts and credit reports. 

Doing so may help authorities capture those responsible and help to prevent these types of crimes in the future. 

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