Identity theft is already a pervasive problem in the U.S. and the number of attacks suffered by average Americans each year continues to grow as criminals find new ways to rip people off. As a consequence, it can be important for all consumers to understand what they can do to better protect themselves from these crimes.
There are a number of ways in which criminals might be able to steal someone's identity, many of which can have a detrimental impact on an otherwise good credit score for those who aren't vigilant about these issues. As a consequence, consumers should learn all they can about the potential scams they may face in their everyday lives and do all they can to both increase prevention in general, and learn how to spot these scams after they have already taken place.
Finding evidence of previous rip-offs
The two most common types of identity theft that typically takes place relates to a consumer's finances, because they involve a criminal gaining access to sensitive data that in turn can affect credit. For instance, in some cases, a crook may be able to gain access to details for existing accounts. These include stolen credit and debit card numbers, as well as PIN codes for the latter, which can result in a person either having thousands of dollars or more in fraudulent debt added to their balances, or their checking or savings accounts being drained, usually all within a relatively short period of time.
The easiest way for consumers to detect these issues is to keep close tabs on their various payment card accounts. This should include regularly checking balances for debit cards online, and looking to see if there are any charges being added to an account that they don't recognize. It will also be important for these accountholders to note their banks' policies on reporting potentially fraudulent transactions, because many may have fairly tight time restrictions on the ways in which they are able to remediate these claims, and often the limit is just a few days, and sometimes less.
The same is true of credit cards, but the period for reporting these crimes is typically a little longer. Therefore, every month, when a bill comes, it is of the utmost importance that a borrower check over every line on the statement just to make sure they recognize every transaction. If not, letting the lender know about the issue as soon as possible can help to clear up any issues that may have arisen over the course of the previous month.
It should be further noted that not reporting these issues within the allowed period can also lead to a diminished credit standing. That's because the amount of credit card debt owed versus the limits allowed by lenders — otherwise known as "credit utilization ratio" — makes up 30 percent of one's score, and the higher the percentage of the balance carried, the lower this portion of a score will be. In general, lenders like to see consumers who have just 30 percent of their total limits or less, and fraud can often far exceed that amount, as thieves likely have little reason to keep their spending on another person's accounts under control. This only provides further incentive for consumers to keep a careful eye on their various accounts to avoid credit card fraud.
The other type of identity theft is far more insidious and can do more significant, longer-term damage than just fraudulent credit and debit transactions might, especially if they go undetected. This involves a criminal gaining access to a victim's personal information, rather than financial. Armed with nothing but a name, address, date of birth and Social Security number, a crook might be able to open one or more fraudulent accounts in a person's name without their knowledge. Once this has happened, the new balance will show up on their credit reports and can therefore have a massive impact on credit standing overall.
Often, the only way for a person to determine if this type of crime has affected him or her is to order copies of credit reports regularly and check them over closely. As with credit and debit card fraud, the earlier these issues are spotted and reported, the more quickly they can be fixed.
Avoiding it going forward
Of course, a big part of avoiding identity theft is also taking preventative measures, and that should include doing more to safeguard sensitive data, such as by never sharing it unless it's absolutely necessary, and checking credit reports as often as possible to make sure no unfair markings are cropping up on their borrowing histories without cause.
If any of these problematic entries are spotted, it can be helpful to work with a credit repair law firm, which may be able to more expediently correct the situation.