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 Perhaps the single most important document that can be used to protect against identity theft is your credit report. That's because credit 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 publication, we're going to discuss the various types of information appearing in credit reports. We'll also explain how you can use that information to figure out if you're a victim of identity theft. Finally, we're going to explain how to go about placing a fraud alert on your 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 credit-reporting agency, and the information is typically summarized into a credit score used by both lenders and creditors.
Since the introduction of free credit reports, the three major credit-reporting agencies - Experian, Equifax and TransUnion - have taken steps to improve the way information is organized in a credit report. This makes it easier for consumers to understand the report and identify inconsistencies as well as errors.
Interpreting a Credit Report
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. Here you'll find 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 number or a Social Security Number (SSN).
If you discover an unknown name, address, or identification number in this section, then 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. This section will also contain a record of payments / repayments made to each creditor. Credit agencies work hard to populate the credit history section using a wide-variety of reporting partners such as credit card companies, lenders, and utilities.
For each creditor account, the agency will record the date on which the account was opened, if the account was a held jointly with another party, the total available credit, the money owed creditors, any payment delinquency, and if the account was written-off, or closed.
When looking for potential identity theft abuses, you'll want to read this section very carefully. Here you're going to try and separate simple errors on the credit report - such as those than can occur when a father and son share the same name - from the suspicious-looking accounts that don't seem familiar to anyone. If you know you've paid your bills on time over the years but the report contains a series or pattern of past-due accounts, then you might be a victim of identity theft.
Public Records
The public records section of the credit report is hopefully blank because if information shows up in this section it's never good news. Here you'll find a record of past legal judgments, bankruptcies, and tax liens.
If you see any activity in this section that you don't recognize, then you should have two concerns: either you're a victim of identity theft, or you have a credit-damaging error on your report that needs to be corrected.
Credit Inquiries
In this final section of your credit report, you'll find a listing of every company that has recently asked to see a copy of the credit report. Here there are two type of inquires:
- Soft Inquiries - these requests originate from companies that wish to sell something - such as a new credit card or a line of credit.
- Hard Inquiries - these requests originate from companies that have been contacted by the individual identified in the credit report when they're 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 of the credit report when trying to identify identity theft.
Fraud Alerts on Credit Reports
If you discover you're a victim of identity theft after reviewing your credit report, then the first thing you should do is place a fraud alert on your credit report. A fraud alert will help prevent identity thieves from opening additional accounts using your name.
Each of the three major credit-reporting agencies has a toll-free telephone number you can use to report the theft. This toll-free telephone number as well as the agency's mailing address appears below:
Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
Toll-Free Number: 1-800-525-6285
Experian
P.O. Box 9532
Allen, TX 75013
Toll-Free Number: 1-888-EXPERIAN
TransUnion
Fraud Victim Assistance Division
P.O. Box 6790
Fullerton, CA 92834-6790
Toll-Free Number: 1-800-680-7289
Filing a Fraud Alert
You 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 in your file, you're entitled to receive free copies of your credit report.
Initial and Extended Fraud Alerts
There are two fraud alerts that can be placed on a credit report:
- Initial Alert - an initial alert can be placed on a credit report 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 credit reporting agencies.
- Extended Alert - an extended alert is placed on a credit report if a verified victim of identity theft provides the reporting 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 credit reporting agencies.
When a creditor sees an alert on a credit report, they are required to verify identity before issuing credit. In some instances, the creditor will attempt to telephone the person directly. This process may add to the time it takes to secure new credit. To mitigate delays, make sure the contact information in the fraud alert is always kept current.
About the Author - Credit Reports and Identity Theft
Copyright © 2008 Money-Zine.com
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