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How to Identify Fraud on Your Credit Report

By Meg C. Hall

If you think you’re not at risk for credit fraud, think again. In 2018, the U.S. Federal Trade Commission received more than 1.4 million fraud reports — up 14 percent from 2017.

According to nationally recognized credit expert John Ulzheimer, everyone is at risk of being a victim of fraud. “The fact that we have an identity makes us all — every single one of us — a possible target. Our job is to try to reduce our exposure,” he said.

Your credit report can be a helpful tool in determining if your credit has been compromised by a fraudster. Here are a few signs to watch for, and what steps to take.

Inspect personal identifying information

The first place to check for suspicious activity on your credit report is in the personally identifiable information category. This section lists the data used to identify you as an individual, such as all variations of your name, birth date, reported addresses and more. If any of this information is incorrect, that’s an immediate red flag, said Ulzheimer.

“I’m not talking about cosmetic stuff, like the misspelling of your name or a missing middle initial. I’m talking about the stuff that is legitimately and materially problematic,” he said. “Variations of your name, addresses where you’ve never lived, a Social Security number or date of birth that is incorrect — anything that is clearly wrong or grossly incorrect is typical of fraud.”

Review new inquiries

Account inquiries are another key area to scrutinize on your credit report as you watch for unfamiliar activity.

“An inquiry is the breadcrumb left behind when you apply for credit, or when someone else applies in your name and your credit report is pulled,” Ulzheimer explained. “Inquiries are the gateway information on a credit report that can alert you to fraud.”

For instance, if your credit report shows that the retailer Target performed an inquiry on your credit last week — and you know for a fact you did not apply for a Target credit card on or around that date — someone is likely trying to defraud you.

Examine your accounts

Next, carefully examine any new records in your accounts list.

“Your credit report is ground zero for true-name fraud, as it pertains to opening accounts,” said Ulzheimer. “If you check your credit report and see some newly opened credit card that you know you did not apply for, then you know that someone has successfully opened a new account in your name.”

Whenever a new account is opened — regardless if it’s legitimate or a fraud — it is reported by the creditor to the three consumer reporting agencies (Experian, Equifax and TransUnion) and will show up on your credit report.

This is why it’s so important to regularly monitor your credit score, Ulzheimer explained. “If you don’t check your credit reports, you might never know it, but you may have an opened account sitting there — or worse, going into default.”

Report suspicious activity

If you see evidence on your credit report that indicates you’ve been a victim of fraud, act fast to get it corrected, said Ulzheimer.

“The chronology of events gets worse and worse the longer it goes uncorrected,” he said. “You have to tell everybody willing to listen to you that you’ve been the victim of fraud. Notify the credit reporting agencies, the lender or original creditor, the debt collector and your bank that you’ve been the victim of fraud.”

After you notifying these organizations of fraudulent activity on your account, they will require you to take certain steps to verify you are a legitimate victim, such as filing police reports and signing affidavits and other legal documents.

“If you are willing to do all these things, the inquiry will be removed, the account will be removed, the collection will be removed, and they won’t contact you any longer. It really extricates you from the process, then it’s up to the lender to determine if they want to pursue the fraudsters,” he explained.

Sign up for a security freeze

While monitoring your credit report may help you identify fraudulent activity and accounts after the fact, it does little in terms of fraud prevention. For a more proactive approach, Ulzheimer recommended signing up for a security freeze — which is free for consumers under the Fair Credit Reporting Act.

“Credit monitoring services or checking your credit report from time to time is reactive. It tells you after something has already happened. It doesn’t prevent it. Whereas a security freeze takes your credit reports entirely out of circulation,” he explained.

With a security freeze in place, when a fraudster tries to apply for credit in your name, the lender will be prevented from even pulling your credit report, stopping the process in its tracks.

“That lets the company know that this is likely a fraudulent application; don’t proceed,” he said. “It prevents you from having to even look for new inquiries, new accounts or new collections, and from having to file police reports and all the stuff that you’re required to do after becoming a victim of fraud.”

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