How to Mitigate the Risk of Credit Fraud

How to Mitigate the Risk of Credit Fraud

Credit fraud occurs when someone takes possession of your confidential information without your consent and uses it to perform financial transactions. These individuals use multiple ways to gain access to data that can be used to purchase goods using another person’s ID. If you misplace your wallet with your credit card in it, you are at a risk of a credit fraud. Anyone who gets their hand on your credit card can use it to make a purchase online or in a local store. Credit fraud does not only occur through financial instruments, but people also apply for different types of loans using someone else’s classified information. If you receive a call from a bank personal verifying your information for a loan application that you are not aware of, you might be at risk of a credit fraud.

How Credit Frauds Occur

Thieves or criminals use many ways to do a credit fraud. If you are in front of an ATM, and someone tries to look over your shoulder, chances are that they are trying to figure out your ATM pin. People can steal information from your mailbox also to acquire your identification documents. Some banks post their credit or debit cards to the applicant’s address. Credit card thieves are on a lookout for such mail. They would take out the bank envelop from your mailbox and perform a credit fraud without you getting to know about it. Some thieves would call you on your cell phone, claiming to be bank representatives. They would try to talk you into giving them confidential information about your credit which they can later on use for doing a credit fraud.

How people usually discover that they have been a victim of credit fraud

Credit frauds are hard to anticipate before they actually occur. However, there are some signs that can indicate if your credit information has been compromised. These may include:

  • Your credit report from the bureau indicates loans that you never applied for.
  • Unexpected transactions start appearing on your bank statement.
  • You start receiving bills from service providers that you have never heard of or used for any purpose in the past.
  • A collection officer calls you asking about a defaulted payment.

How to protect yourself against credit fraud

With electronic transactions and use of plastic money at its peak, anyone using a bank account is vulnerable to credit fraud. Although there is no special tool to make your credit profile 100% fraud-proof, there are certain ways in which you can reduce the risk of a credit fraud. These include:

Don’t give your confidential information like driving license number or bank account number to anyone on the phone unless you are expecting their call. If someone calls you from an agency and asks your identification data, look online to see if they actually exist and whether they are a legitimate business or not.

Carry your wallet and credit or debit cards in separate places while traveling. This will help you mitigate a credit fraud even if you lose your wallet. A stolen or lost wallet without any financial instrument will not be of much use to anyone who finds it.

  • When doing a transaction over the counter, make sure to get your card back before you leave.
  • If you receive a credit invoice at a store, a restaurant or any other place, make sure to check the total amount and draw a line at any blank spaces between the rows above the signature line.
  • When writing a check, make sure to add a memo that you can use later on to identify the transaction. Memos on a check are ideal for noting down any unique information about the transaction like the purpose of the check.
  • Check your statements on a regular basis to check for any irregularities in the recent past. If there is an unidentifiable transaction on your credit card then you should contact your issuer immediately to dispute the transaction.

How to report a credit fraud

As soon as you realize that you have been a victim of a credit fraud, you should report the incident to the following authorities:

Credit Bureau

Any bank or a financial institution that opens up a new account or provides a new financing facility has to check their applicant’s information with a credit bureau. Therefore, it is important that you report your credit fraud to the bureau at the first instance. Once you have reported the incident to the bureau, the credit thief will not be able to open any other account in your name.

Police Station

Next, you should head to the police station. Tell them about the situation and report all items that have been stolen. This will help you in instances where the thief makes any unlawful transactions on your credit or debit card. Since you have reported the incident to the police, you should not be liable for any fraudulent activity that occurs after that.

Card Issuer

You should also contact your card issuer to block your card and any other accounts on your name. You should also talk about what your rights are as a victim of a card fraud. You can show them your police report as proof that your card has been stolen and that you have nothing to do with any future transactions made on that card.

Whenever you open an account with a bank, you should enforce all the security measures that are available to you. Download your bank’s application on your phone and make use of utilities like transaction alerts. There are also credit protection agencies that monitor all your credit cards on a regular basis. In case there is a credit fraud, all your financial service providers are notified by these credit protection agencies, and future transactions are put on hold. Although credit fraud cannot be avoided completely, we can mitigate the risk by being vigilant and keeping our financial instruments safe and secure all the time.


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