Moneyzine
/Debt Consolidation/Credit Reports and Identity Theft

Credit Reports and Identity Theft

Moneyzine Editor
Author: 
Moneyzine Editor
6 mins
November 22nd, 2023
Advertiser Disclosure
Credit Reports and Identity Theft

Perhaps the single most important document that can be used to protect against identity theft is a credit report. These reports contain a wealth of information when it comes to financial transactions, as well as the process of accurately matching those transactions to individuals. In this article, we're going to discuss the various types of information appearing in credit reports. We'll also explain how to use that information to figure out if someone has been a victim of identity theft. Finally, we're going to explain how to go about placing a fraud alert on a credit report.

Credit Reports

The purpose of a credit report is straightforward. Debt, credit, and repayment information is organized in such a way as to allow creditors and lenders to assess the creditworthiness of a consumer. The report itself serves as a historical recording of the facts gathered by the agency, and the information is typically summarized into a credit score. Since the introduction of free credit reports, the three major agencies - Experian, Equifax, and TransUnion - have taken steps to improve the way information is organized into a report. This makes it easier for consumers to understand the information contained in the report, identify inconsistencies, as well as errors.

Interpreting Reports

Credit reports are organized into four sections: consumer identification information, borrowing / payment history, public records, and inquiry history. Each of these sections is summarized below, including how this information can be used to uncover potential instances of identity theft.

Identifying Information

This first section identifies the individual that is later discussed in the credit report. In this section appear multiple spellings and / or variations on the spelling of that individual's name. Current and prior mailing addresses will appear in this section, as will unique identification numbers such as a driver's license or a Social Security Number (SSN).

Credit reports are historical record of facts gathered by the agency and allow creditors and lenders to assess the creditworthiness of a consumer.
Moneyzine EditorMoneyzine Editor

If an unknown name, address, or identification number is discovered in this section, a red flag should go up for a possible case of identity theft.

Credit History

This second section contains information on the individual's borrowing, and credit activities. It will also contain a record of payments / repayments made to each creditor. Reporting agencies work hard to populate the credit history section using a wide-variety of partners such as credit card companies, traditional lenders, and utilities. For each account, the agency will record the date on which the account was opened, if the account was held jointly with another party, the total available credit, the money owed, any payment delinquency, and if the account was written-off, or closed. When looking for potential identity theft abuses, it's important to read this section very carefully. Simple errors on the report, such as those that occur when a father and son share the same name, need to be separated from the suspicious-looking accounts that don't seem familiar to anyone. If bills have been paid on time over the years, but the report contains a series or pattern of past-due accounts, this can be a signal of identity theft.\

Public Records

The public records section of the credit report is hopefully blank. If information shows up in this section, it's never good news. This part of the report contains a record of past legal judgments, bankruptcies, and tax liens. If activity in this section does not look familiar, there are two concerns. This can signal identity theft, or there is a credit-damaging error on the report that needs to be corrected.

Credit Inquiries

In this final section of a report appears a listing of every company that has recently asked to see a copy of the report. This includes two types of inquiries:

  • Soft Inquiries: requests that originate from companies wishing to sell something, such as a new credit card or a line of credit.

  • Hard Inquiries: requests originating from companies contacted by the individual identified in the report when seeking new credit. This can be as simple as a request to open a new cellular phone plan through a pre-approval on a mortgage.

Since the activity recorded here can originate from many sources, it's not a particularly helpful section when trying to pinpoint identity theft.

Fraud Alerts on Credit Reports

If someone discovers they're a victim of identity theft after reviewing their credit report, they should consider placing a fraud alert on their report. A fraud alert will help prevent identity thieves from opening additional accounts using the victim's name. Each of the three major credit-reporting agencies has a toll-free telephone number to use when reporting a potential theft of identity. This toll-free telephone number as well as the agency's mailing address appears below: EquifaxP.O. Box 740241Atlanta, GA 30348Toll-Free Number: 1-866 349-5191ExperianP.O. Box 9532Allen, TX 75013Toll-Free Number: 1-888-EXPERIANTransUnionFraud Victim Assistance DivisionP.O. Box 2000Chester, PA 19022-2000Toll-Free Number: 1-800-680-7289

Filing a Fraud Alert

Victims only need to contact one of the above agencies; that company is then required to contact the remaining two agencies. Once a fraud alert is placed on a file, the victim is entitled to receive free copies of their credit report, allowing them to continue to monitor the document for unfamiliar transactions.

Initial and Extended Fraud Alerts

There are two fraud alerts that can be placed on a credit report:

  • Initial Alert: placed once identity theft is suspected. This initial alert stays on a credit report for 90 days. During that time, the potential victim is entitled to one free credit report from each of the three reporting agencies.

  • Extended Alert: placed if a verified victim provides the company with an identity theft report. An extended alert entitles the victim to two free credit reports over the next twelve months from each of the three reporting agencies.

When a creditor sees an alert on a report, they are required to verify identity before issuing new credit. In some instances, the company will attempt to telephone the person directly. This process may add to the time it takes to secure a loan or new credit. To mitigate delays, it's important to make sure the contact information appearing in the fraud alert is kept current.

Additional Resources

  • A number of identity theft regulations were signed into law as part of the Fair and Accurate Credit Transactions Act (FACT Act), which required financial institutions and creditors to develop, and implement, written identity theft programs by November 1, 2008.
    Moneyzine Editor
    Moneyzine Editor
    September 25th, 2023
  • Alarming Identity Theft Statistics & Facts for 2024
    With people increasingly relying on digital devices, their sensitive data is more vulnerable than ever to theft. In this overview of the latest identity theft statistics, we’ll examine how common ID theft is and how much money its victims lose each year. We’ll also take a closer look at the victims’ demographics and explore the effects of financial ID theft. Finally, we’ll discuss online identity theft and see how it affects individuals and institutions.
    Radovan Sekulic
    Radovan Sekulic
    February 27th, 2023
  • Victims of fraud or identity theft need to report the theft to various authorities. By taking the proper corrective action, victims can reduce the risk of further theft, and start a process that will clean up the inaccurate information appearing on their credit report. Recent statistics indicate nearly ten million adults in the United States are victims of identity theft each year. In this article, we're going to discuss the measures individuals can take if they discover they're a victim. This includes reporting the theft to credit reporting agencies, law enforcement officers, as well as the Federal Trade Commission.
    Moneyzine Editor
    Moneyzine Editor
    September 25th, 2023
  • Details Last Updated: Monday, 15 March 2021
    Moneyzine Editor
    Moneyzine Editor
    September 25th, 2023
  • One of the ways to combat identity theft is to freeze a credit report. It's effective in preventing a thief from opening an account or new line of credit. Unfortunately, these restrictions don't stop all forms of theft. In this article, we're going to explain how freezes can be used to help prevent identity theft. We're also going to explain how to go about limiting access to a credit report. Finally, we're going to talk about the types of identity theft a freeze doesn't prevent.
    Moneyzine Editor
    Moneyzine Editor
    September 25th, 2023
  • Individuals worried about identity theft should consider enrolling with a credit monitoring service. These programs will monitor credit reports, and will notify participants when a change or inquiry is made to their report. These services can include locking or unlocking a file, automated notifications, as well as access to credit scores. sources have stated that 33% of Americans have experienced identity theft.
    Moneyzine Editor
    Moneyzine Editor
    September 25th, 2023

Contributors

Moneyzine 2024. All Rights Reserved.