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The Scariest Thing to Find on Your Credit Reports

Credit Score, Personal Finance
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Monitoring your credit reports should be like flossing: a routine that’s not fascinating but that can help prevent something painful from developing.

So if an account that’s not yours pops up, be as alarmed as if you had hit a nerve. It could suggest identity theft — that someone has the keys to your financial life and can ruin your credit and commit fraud or worse in your name.

Keep an eye on your credit

Regularly checking your credit reports is good credit hygiene. You are entitled to a free report from each of the three major credit bureaus once every 12 months through AnnualCreditReport.com. For the best protection, also use a free credit report service to monitor things more frequently.

The worst data breaches, such as the Equifax hack that exposed the personal information of more than 145 million people, can give scammers the raw materials they need. With information such as your name, Social Security number and birthdate, someone can open a credit account in your name.

Before you call the police or file a report, make sure the account isn’t yours. Maybe you got instant credit at a retail checkout and forgot, or perhaps a retailer account is showing up under the name of the bank that issues its cards. Look at the date opened and the amounts charged for clues. You can also call the retailer and ask. Reasons may be innocent, like transposed numbers.

More ominously, you might have a new account you didn’t open.

What to do

First, place a fraud alert on your credit file. This signals to potential creditors that any credit applications made in your name should get additional scrutiny. It also entitles you to an additional copy of your credit reports. Use them to check for any more potentially fraudulent activity.

If the new account appears to be fraudulent, you have a mess to clean up. You will need to:

  • Report the identity theft to the Federal Trade Commission and/or your local police department
  • Close the fraudulent account
  • Call the fraud department of any creditor involved, explain what happened and which charges are bogus
  • Correct your credit reports by filing a dispute with each credit bureau.
    The FTC has a sample letter that can help you organize the information.
  • Consider a credit freeze or an extended fraud alert. You are entitled to a seven-year fraud alert, which is free, if you are an identity theft victim. A freeze offers better protection but can be cumbersome and expensive.

Then, stay vigilant: Review credit card and bank statements for suspicious transactions, set up alerts to notify you of charges as they happen, and watch your credit score and report information for changes.

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