Identity theft is a serious thing, and it’s important to do what you can to be diligent about identity theft protection. The fact of the matter is that identity theft can lead to some disastrous consequences, and not just financially. When an identity thief uses your identity to commit a crime, for example, your name becomes an alias for that person, which can cause trouble with background checks and more, sometimes for decades.
How new account fraud works
One of the most common and one of the most dangerous types of identity theft is new account fraud. New account fraud works like this:
- An identity thief steals your personal information, such as your social security number, address, bank account numbers, credit card numbers and/or background information.
- She then uses that personal information to open up new accounts. It might be a credit card account, a line of credit, or in some cases even a personal loan or mortgage.
- She then goes on a spending spree, racking up debt in your name.
What you can do
There are some things you can do in order to keep new account fraud from happening, or at least combat it more quickly when it does happen.
Fraud alerts are one of those things. A fraud alert is a signal to any creditor that they should take extra steps to verify the identity of someone applying for credit. An alert can be created for 90 days with the credit reporting agencies. When you call one of the three major credit reporting agencies, that company is required to notify the other two.
Another option is the credit freeze. When you do a credit freeze, no company can look at your credit files unless you already have an account with them. This shuts down the vast majority of new account fraud, because creditors usually want to look at your credit file before they give you any credit. The rules on a credit freeze vary from one state to the next, and there is usually a fee involved.
