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How Credit Reports Can Help Prevent Identity Theft

Identity theft is on the rise. According to a 2005 report conducted for the Council of Better Business Bureaus (CBBB), more than 9.3 million Americans became victims of identity fraud within the past 12 months.

Identity theft is a particularly harsh crime in which someone wrongfully obtains and uses another person's personal data to commit fraud or deception, typically for his or her own economic gain. This crime is often undetectable until you apply for credit or your report is pulled for insurance or employment verification. Unfortunately, it is often a monumental task to identify all of the issues/errors and to properly correct them. To reduce the risk of ID theft, keep abreast of your credit report and the details that it contains. One should obtain their report from all three major credit bureaus, at least once annually. Thanks to a recent amendment to the Fair Credit Reporting Act (FCRA), you are entitled to receive one free copy of your credit bureau each year.

Obtaining your credit report

The first step to preventing identity theft is obtaining a copy of your credit report. You can contact any of the credit reporting agencies below:

• Equifax, P.O. Box 740241, Atlanta, GA 30374; (800) 685-1111
• Experian, P.O. Box 2002, Allen, TX 75013; (888) 397-3742
• TransUnion, P.O. Box 1000, Chester, PA 19022; (800) 916-8800

You are entitled to one free report from each of the three agencies annually. Find out how to obtain your free annual credit report here.

Look for the warning signs

Once you have your credit report in hand, take a good look at it. Is there loan activity on your report that you don't recognize? Do any of the balances look odd or inflated? Are there active credit card accounts that you have no knowledge or memory of? Also, are the monthly statements for accounts you had opened in the past no longer arriving in the mail? If the answer to any of these questions is yes, you may be a victim of identity theft.

If you think you may be a victim

Immediately call the financial institutions or credit card companies in question and ask for the account history and copies of any missing statements. Also, on accounts that you are aware of, cross-check your personal information such as your current mailing address to see if any information has been changed.

If you suspect fraud, contact the police immediately. You should be directed to take the following actions:

• Contact the fraud department of any of the three major credit bureaus to place a fraud alert on your credit file. As soon as one credit bureau confirms your fraud alert, the two other credit bureaus will be automatically notified, and all three credit reports will be sent to you free of charge.
• Contact creditors to close the accounts that you know or believe have been tampered with or opened fraudulently. Use the "ID Theft Affidavit" when disputing new unauthorized accounts.
• File a police report. Get a copy of the report to submit to your creditors and other agencies that may require proof of the crime.
• File your complaint with the Federal Trade Commission. The FTC maintains a database of identity theft cases used by law enforcement agencies for investigations.

Prevent identity theft from happening to you

How does someone steal your identity? It can happen any number of ways, beginning with the junk mail you toss out, which may contain bank and credit card statements or "special offer" checks.

One of the best ways you can protect your credit is to understand how to read your credit report and spot suspicious activity. Consult only with a "Certified Consumer Interviewer," certified by the Consumer Data Industry Association (CDIA), to get help understanding your credit report. And when it comes to understanding your credit report and repairing your credit, don't trust just anyone with your personal finances. Consult only with a credit counselor certified by the National Foundation for Credit Counseling (NFCC), and verify that the credit counseling agency is a member in good standing of both the NFCC and the Better Business Bureau (BBB).