If you’re one of the millions of Americans who were victimized by a common form of identity theft in 2021 or another form of identity theft in 2022, you’re certainly not alone. In the past several years, identity theft has soared to all-time highs, with an estimated 15.4 million U.S. consumers victimized by a form of identity theft in 2022. Identity thieves are stealing your personal information (or any other personal information that they can obtain) and using it to make credit and loan applications for everything from airfare to bank loans. Many of these criminals also open bank accounts in your name. While you may think that your personal information is safe with the credit bureaus, the way that identity theft works is that they aren’t selling personal information like a product — instead, they’re buying it and then reselling it to scammers.
But what do identity thieves look like, and how do they obtain the personal information they need to file fraudulent credit and loan applications? To answer these questions, we first need to understand what type of identity theft is taking place.
Types of Identity Theft
The four most common forms of identity theft are:
- Substitute Credit: When you use your real Social Security number to open a fraudulent credit account, your credit score takes a severe hit and your credit report may be inaccurate.
- Casual Credit: When you are victimized by identity theft at some point in your life, your identity may be stolen repeatedly by criminals who open new credit accounts using your identity. You may not notice this, but the more accounts a thief has open in your name, the better your score is.
- Credit Card Fraud: When someone uses your credit card fraudulently, they either charge your account with a fraudulent purchase or they decline the purchase.
- Invoices and Debit Collection: In the mail, you receive an official-looking letter from a debt collector demanding payment for some sort of debt you don’t even recognize. This type of fraudulent debt can be a scam, or the debt collector is seeking payment for something you may have never even owed.
By and large, your credit score is influenced by how many accounts you’ve had open in your name. Credit card and loan fraud are relatively easy to identify and can have a substantial impact on your score, whereas bogus debt collection notices or knockoff credit cards are much more difficult to catch.
Red flags you can look for to spot credit card and loan fraud include:
- Requests for recent utility or bank account records
- Insist that you provide a copy of your driver’s license or passport when requested
- Negative marks on your credit report indicate an account that you never had (aka negative marks)
- A significant uptick in the number of credit cards you have open in your name
In most cases, though, there are no obvious red flags you can use to help identify if a credit card or loan account is fraudulent. To help you protect yourself, there are several steps you can take to ensure your personal information is protected.
Warning Signs of Identity Theft
The best defense against identity theft is to be vigilant. Here are the top five warning signs to watch for:
- A sudden increase in mail coming to your home
- Your mail carrier, police officer, or other official-looking person notifying you of a new account or loan you never applied for
- Your credit card company calling to ask you to verify your personal information
- Your credit card company charging a fraudulent charge to your account without ever mailing you a new credit card
- A return address for a business or government agency that you have never heard of before
If you see any of these five, it is time to contact the identity theft protection firm that is protecting your credit so that they can investigate. You will probably have to sign a complaint or dispute and potentially have to spend a small amount to initiate the process.
After the investigation is complete, you will be given a statement of what they found and how it affected your score. Your identity theft protection firm will handle the financial issue with your credit card or loan providers so that you do not have to take the matter to court.
How to Protect Yourself Against Identity Theft
One of the best ways to protect yourself from identity theft is to sign up for identity theft protection. This type of insurance protects you by preventing someone else from taking over your identity. You can do this by paying a small yearly fee in addition to the price of a credit card or loan. Whether you need help or just want to know more, there are several companies that will help. These firms will do the hard work of investigating your situation and investigating the fraud that is being committed on your behalf. Their goal is to give you peace of mind and return your credit score to its former glory.
You may also be able to get a free identity theft check if you are having problems with identity theft. You will just have to contact the Federal Trade Commission (FTC), which handles the task of flagging fraudulent activity on your credit report. You can request a free report if you have been notified that you have been the victim of a fraudulent transaction. The best way to protect yourself from identity theft is to be vigilant and to contact an identity theft protection firm to help.
Protecting Yourself Against Identity Theft
Follow the followings:
- The first step to protecting yourself against identity theft is to be proactive. You can’t eliminate your chances of becoming a victim of identity theft, but you can drastically reduce the chances by regularly updating your personal information.
- If you’re storing any sensitive information like social security numbers or banking information on an insecure device, place it in a safe place. Don’t leave your information out in the open for someone to find. Consider locking your desktop or laptop and backing up your data regularly.
- When you’re filling out a government document, the first thing you should do is protect your personal information. Remove any personal information and don’t sign blank documents. Ensure that you know exactly what information you’re signing, and that the information is exactly what you intend to share.
- The next step is to take advantage of anti-theft features on all electronic devices. You can check your device’s anti-theft features to make sure your personal data isn’t vulnerable. You can also keep a close eye on your devices to make sure that they don’t go missing.
- You should also regularly check your credit reports to make sure you’re not being abused by identity thieves. By knowing whether or not a specific account is opened in your name, you can stop fraud in its tracks. You can check your credit reports from all three of the major credit reporting companies to see if there’s any fraudulent activity on your credit. It’s also a good idea to check your credit scores from all three companies as well. Your credit scores are like financial birth certificates that tell lenders how you’ve handled debt, payment history, and other factors when determining your creditworthiness.
Protecting Your Credit Scores
A single credit card or loan account opening in your name can have a serious impact on your credit scores, especially if the account has been open for years. Lenders want to see that you can handle all of your payments and that you haven’t had any new accounts open for a long time. If you have a fraudulent account, they’re not going to feel comfortable lending to you. Even if you’re not a victim of identity theft, you should know the signs that point to you being a victim of identity theft. For example, did you recently receive an unreturned survey or a sales slip with your personal information on it?
- If your credit score has taken a substantial drop, it’s important that you take steps to improve it. Don’t let credit score changes go unnoticed. In most cases, your credit scores are fairly predictable, but even if yours has taken a minor hit, there are steps you can take to help bring it back up.
- If you’re missing any accounts, you should check your credit reports to see what accounts have disappeared. You can request a copy of your credit reports from each of the three major credit reporting companies at AnnualCreditReport.com. You can also dispute a credit report with each company. Once you’ve reviewed your credit report, you can check your credit scores for free each month by checking Credit.com’s Credit Score and Credit Scorecard.
- Once your credit scores have increased, you should check to make sure that the other information in your credit report hasn’t been compromised. Even if a credit card you didn’t open in your name has been closed, if the card has been listed as open, you could still see a problem. For example, you could see a late payment from a legitimate credit card that was closed when you opened a fraudulent account. You can also see credit report errors with each of the three major credit reporting companies on Credit.com.
Ultimately, it’s important that you know the signs of identity theft and make sure that you are keeping an eye on your credit scores and making sure that nothing has gone wrong with them. As a victim of identity theft, you’ll need to use this information to help prevent future problems.
Tips to Avoid Identity Theft
The steps you can take to avoid identity theft can be taken individually or in combination. To begin with, you should learn all you can about identity theft, the risks of credit cards and bank accounts that you don’t know about, and how to protect yourself from identity thieves.
1. Know your credit scores
Your credit score is the single most important tool you have to prevent identity theft. People aren’t the only ones who use your credit information, but they are the ones who know about it and how it can affect you. In most cases, credit reporting companies aren’t going to deny someone a credit card or loan if they have a good credit score. The only time they might deny someone a credit card or loan if they have bad credit is if you haven’t used the card or loan for a long time and there’s not enough income or assets available to make the payment.
In many cases, people don’t realize that they are targets for identity thieves. They just don’t see the point of applying for a credit card or bank account, so it doesn’t make sense to check your credit report. People need to understand that credit information has a price, and the greater the information on your credit report, the more you’re worth to identity thieves. Make sure that you know how your credit scores are calculated, how to dispute incorrect information in your credit report, and the steps you can take to improve your credit.
2. Protect your credit information
Even if you’ve never been the victim of identity theft, you need to be on guard against it. Identity theft is a very real threat and criminals are getting more and more sophisticated, especially as they use stolen information to commit fraud and other crimes. The best thing you can do is to be sure that no one else has access to your credit information, especially your checking account. If a criminal has access to your checking account, there’s a much better chance that he can open an identity theft account and access other forms of personal information. For this reason, you need to set up a new bank account or debit card.
You can do this by setting up online banking or changing your account number and PIN. The other option is to set up an automatic payment with your bank to keep your checking account always topped up. This gives you the best of both worlds — you keep your checking account but you won’t have to keep an eye on it. The main thing you can do is to create some distance from your checking account. This means checking in every couple of days to make sure that your account hasn’t been emptied and that no one is accessing it from your internet bank, social media, email, or other communication tools.
Identity theft is a real threat, but it doesn’t have to ruin your life. The steps you can take to avoid identity theft can make the difference between having a compromised life and one that you can lead with your eyes wide open. As you take the necessary steps to protect yourself and prevent identity thieves from stealing your identity, you’ll start to realize that the likelihood of becoming a victim is slim, but not zero.
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