You apply for a car loan, but the lender points to a personal loan on your credit report that you never took out. A fraudulent loan can damage your creditworthiness for months before you discover the problem. These five warning signs can help you tell fraud apart from an ordinary reporting mistake so you know which fix to pursue.
Unfamiliar addresses or employers in your personal information
Your credit report lists the names, addresses and employers tied to your file. Identity thieves often add their own address or phone number so bills never reach you. Unfamiliar details don’t always mean theft, though. A credit bureau may have merged your file with someone else’s, creating a mixed file that needs a different kind of dispute. A strange address can be the first clue that someone plans to borrow in your name.
Hard inquiries from lenders you never contacted
A hard inquiry is the record a lender leaves when it checks your credit after you apply. One from a lender you never contacted may mean someone applied in your name. That said, prescreened offers and reviews by your current card issuer count as soft inquiries, which don’t affect your score. A car dealer may also send one application to several lenders you won’t recognize.
Loan accounts you never opened or received money from
The accounts section may reveal unauthorized borrowing that you would otherwise overlook. Check each entry’s open date, lender, loan type and original amount. An auto loan when you don’t own a car is a red flag, and accounts you don’t recognize are a common sign of identity theft. Before you assume fraud, remember that a sold loan may appear under a new servicer’s name.
Late payments on a balance you didn’t borrow
Thieves don’t repay what they borrow, so the lender may report the account 30, 60 or 90 days late. Payment history typically carries heavy weight in credit scores, which means loans opened through identity theft can raise your borrowing costs and hurt rental applications. If you really did take out the loan, a servicer error may be to blame, and the standard dispute process applies.
Collection accounts tied to a creditor you don’t recognize
The lender may charge off an unpaid fake loan and sell it to a collection agency. The debt appears as a separate account naming the original creditor, which is often the first sign people notice. If you dispute it in writing within 30 days of receiving the collector’s validation notice, the collector generally must verify the debt before continuing. Check the original creditor field too, since the collection may stem from a forgotten medical or utility bill.
Report a fake loan as identity theft before you dispute it
If the signs point to fraud, file a report with the Federal Trade Commission before you dispute anything. Under the Fair Credit Reporting Act, sending that report, proof of identity and a list of the fraudulent items to each credit bureau generally requires the bureau to block them within four business days. A bureau may refuse if it reasonably finds the request was mistaken or that you benefited from the transaction.