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Understanding Identity Theft and How to Protect Yourself
Identity theft occurs when criminals obtain your sensitive information and use it to impersonate you, often stealing money or borrowing in your name. Because criminals can access victims’ data through various methods, you may not realize you’ve been targeted until the thief is already using your information.
Signs of Identity Theft
By learning the following telltale signs and checking for them regularly, you may be able to detect identity theft early and act before there’s significant damage to your finances or credit. Here are 10 signs of identity theft to know, plus how criminals get your information and how to report identity theft.
1. Unrecognized Bank or Credit Card Transactions
Unauthorized transactions on your bank or credit card accounts can indicate that criminals are using your debit or credit card to steal your money. These irregularities can be easy to overlook—especially since criminals often use small transactions to confirm account access before making a big charge or withdrawal.
Get in the habit of reviewing your transactions regularly to spot suspicious activity right away. If you notice an unauthorized charge, contact your bank or credit card’s fraud department immediately for help securing your account.
2. Unfamiliar Inquiries on Your Credit Report
Unfamiliar inquiries on your credit report could indicate that a criminal has applied for credit using your personal information. If an identity thief uses your information to apply for a new credit card or loan, you may end up with unpaid debts in your name that could tarnish your credit record.
Checking your credit reports regularly can help you notice unauthorized inquiries right away. If you spot a strange inquiry, make sure it’s unrelated to your own activity and contact the lender using the information included in the inquiry listing on your credit report. You have the right to dispute inaccurate information on your report.
3. Unexpected Bills or Statements
If you receive a bill for goods or services you never purchased, or statements from a bank or credit card account you never opened, don’t just shrug it off. It could be a sign of fraudulent activity taken in your name. Contact the company or institution about any unauthorized transactions and, if fraud appears to be the case, report it to appropriate authorities and take the steps outlined below to protect your credit and finances.
4. Missing Mail
If a regular bill, bank, or credit card statement stops arriving on its regular schedule, it could be an indication of an account takeover scheme. Crooks use account takeovers to steal information and hijack your account for use in fraud or other criminal activities.
Follow up with the relevant company to find out where your bills may be going if any are missing. If they’ve been redirected without your authorization, have them start a fraud investigation and secure your other accounts.
5. Unexpected Credit Score Drop
A sudden drop in your credit score with no discernible cause could be a sign of credit fraud. If an identity thief takes out a loan or credit card in your name, they’ll inevitably fail to make payments on that debt. These missed payments will appear on your credit reports, and since payment history is the single biggest factor contributing to your FICO® Score, even one missed payment can cause a major drop in your scores.
A payment isn’t considered delinquent until it’s gone unpaid 30 days after its due date, and it could take several weeks from then to appear on your credit reports. Since a surprise credit score drop could be a late indicator of trouble, you should act immediately to investigate the source and protect yourself.
6. Denied Credit Applications
If you have a solid credit history and lenders have been willing to extend you loans or credit cards in the past, getting turned down on one or more credit applications could be a sign that criminals have done something that damaged your credit.
If a credit application is denied based on your credit score, the lender must provide an explanation that includes the score they used, along with information on factors that determined that score. Factors that sound wrong—with unexpected mentions of “delinquency” or “collections,” for instance—are grounds for immediate action. Even if the explanations aren’t alarming, you should check your credit report following and denial of credit and follow up promptly on any unauthorized accounts or activities.
7. Rejected Tax Return
If you try to file your tax return and are denied, it could be a sign of tax fraud. Criminals file fraudulent tax returns using stolen identities in order to steal tax refunds from victims. Getting rejected for a duplicate tax return may mean that someone has already filed using your Social Security number. If this happens to you, the IRS will prompt you to complete Form 14039, Identity Theft Affidavit to report the identity theft.
Other signs of possible taxpayer identity theft include:
- The IRS sends you a letter about a tax return you didn’t file
- You get an IRS notification that someone has set up an online account in your name
- A tax transcript that you didn’t request arrives in the mail
- IRS records indicate you earned income for an employer you didn’t work for
If you suspect that you’re a victim of tax fraud, you can also call the IRS for taxpayer victim assistance.
8. Debt Collectors Contact You
If you receive letters, phone calls, or emails from collection agencies seeking payment on a debt you don’t owe, it could be another sign of identity theft. A criminal may have run up a bill in your name.
If you’re being pursued for a payment you don’t owe, check with the collection agent about the nature of the debt in question and ask about the alleged delinquency. You should also check your credit reports for signs of the collection account (which can hurt your credit score) and for evidence of other unauthorized activity related to the matter, such as the opening of an unauthorized credit account.
Delinquent debts are typically not turned over to collection agencies until payments are several months overdue, so unexpected debt collection calls can be a very late indication of criminal activity. You should act immediately to report the activity and protect your finances and credit history if you have any doubt the delinquency is legitimate.
9. Unusual Activity on Your Social Security Account
Because Social Security numbers (SSNs) are used as personal identifiers by many financial institutions as well as the federal government, they’re popular targets for identity thieves and may be bought and sold on illicit dark web exchanges along with account numbers, passwords, and other personal information.
For that reason, it’s a good idea to set up a free account with the Social Security Administration, and check your Social Security Statement regularly to ensure no one is collecting your benefits without permission. If you spot unusual activity on your account, or otherwise believe your SSN has been stolen, take action immediately to contain the damage.
10. Data Breach Involvement
Having your data exposed in a breach puts you at risk of being targeted by identity thieves. After a breach, your personal information could be circulated by hackers and used to open accounts in your names or commit other acts of credit and financial fraud.
After a breach, businesses may alert those affected to what personal information was compromised.
Consider taking the following steps right away to boost your defenses.
If Your Passwords Were Exposed in a Breach
Change passwords to unique, hard-to-guess strings of characters, numbers, and symbols. If you use the same password for multiple accounts—even for accounts not involved in the breach—change them immediately. Consider using a password manager to create and store secure passwords. You can also enable multifactor authentication for your online accounts and apps for added security.
If Your Social Security Number Was Exposed in a Breach
Keep a close eye on your credit reports and account statements. Sign up for free credit monitoring to get alerted to any changes to your report and score. Follow the steps in the next section to work with the credit bureaus to add additional security measures to prevent credit fraud.
How to Report Identity Theft
To report identity theft, follow these steps:
- Report suspected identity theft to the Federal Trade Commission (FTC) by visiting IdentityTheft.gov. You’ll be prompted to provide details on compromised information and accounts.
- Notify your bank, credit card company, or other financial institutions right away by contacting their fraud departments.
- You have the right to place a fraud alert or security freeze on your credit reports at the three national credit bureaus (Experian, TransUnion, and Equifax). Requesting a fraud alert at one bureau automatically applies alerts at all three bureaus, so that may be the speediest course of action. A fraud alert stays on your report for one year, at which point you could decide between freezing your credit reports and extending the fraud alert. To freeze your credit reports, you’ll need to contact each credit bureau individually.
How Identity Thieves Get Your Information
Identity thieves gain access to their victims’ information through a range of tactics, including:
- Data breaches: Sensitive information exposed in breaches can wind up in the hands of identity thieves, who may use the data to gain access to your accounts or open up new accounts in your name.
- Phishing: Criminals engineer fake scenarios or messages designed to trick you into handing over your sensitive information. For example, phishers use fake websites, imposter phone calls, or even nefarious QR codes to gather your Social Security number or financial data.
- Physical theft: Identity thieves may steal your purse, wallet, or mail to gain access to your financial accounts or personal information.
- Social media: If you’re putting information such as your full name, date of birth, hometown, or current address online, you could be giving identity thieves bits of information they can piece together to break into your accounts or commit acts of fraud.
- Shoulder surfing: When you’re in a public place reviewing paperwork, banking, or logging in to your accounts on a laptop or phone screen, identity thieves may be lurking nearby hoping to catch and record sensitive information. Being careful of when and where you are when you view sensitive information on a screen or on paper can help you avoid information exposures.
The Bottom Line
Identity theft is an ever-present threat in the digital age, and watching out for signs of fraudulent activity is one important part of protecting yourself. Paying attention to your bills, bank statements, and credit statements is vital, and so is checking your credit reports regularly. Free credit monitoring from Experian, which alerts you to activity on your Experian credit report and changes in FICO® Score based on Experian data, can automate some of that, and help keep your hard-earned credit safe from criminals.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you with all your mortgage needs and ensure your financial security.
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