With identity theft becoming more and more prevalent in today's society, it pays to know - quite literally - just what credit fraud is and how best to avoid it. For victims, the answers are unfortunately very obvious, as having your credit hijacked and used by another can leave you with staggering levels of debt and a tarnished credit score, undoing years of responsible spending on your part. But the truth is according to the credit reporting bureau, Experian, is that credit fraud ultimately affects all of us in the form of higher prices and interest rates1.
Credit fraud occurs when someone has obtained your credit card information (or even the physical card itself) and begins racking up charges under your name. According to the credit reporting bureau Experian, some of the warning signs around credit fraud include1 :
- Bills sent by unfamiliar sources
- Calls from creditors or collection agencies over transactions you don't remember making
- Notes on your credit report about accounts that you hadn't opened
- Suspicious charges on your bank statements.
But how does credit fraud happen at all? Experian has outlined some of the most frequent sources of this growing problem:
- Mailbox theft
- Online theft, where personal and financial information may be compromised on unsecure Wi-Fi networks or taken through internet scams like "phishing" webpages
- People who look over your shoulder as you type in a PIN number
- Stolen or lost credit cards
- Thieves who sift through your garbage for important documents
- Unsolicited emails.
Knowing how ID thieves commit credit fraud can go a long way in helping you protect against becoming a victim yourself. Unfortunately, there's no way to completely guarantee identity theft protection. You can, however, make use of a credit fraud protection service to (1) help you protect against it; (2) alert you sooner rather than later; (3) help you recover from it; and (4) minimize the harm done to your finances. With this kind of professional help, you can not only freeze your credit accounts and protect against thieves from committing any further damage, but potentially recoup some of the financial losses associated with this crime as well.