Not every financial scam involves stealing credit card or bank account information for a spending spree. Sometimes, your information is used against you by scammers posing as you on a loan application.
You could find yourself in a situation where you are preparing for a family vacation, only to get a call from a collection agency informing you that you have fallen behind on your loan payments. The only problem is, you don’t have any loan.
What happens next could have major implications for your credit score. If you have kids on their way to college, or plan on moving or buying a new car soon, you’re going to want a clean credit report to avoid penalties and increased interest rates on your future loans. It’s vital to address the situation immediately, before others in your family are affected or other assets of yours become compromised.
Your financial institution offers the first level of identity protection through the KYC process. KYC stands for “Know Your Customer,” which is the method of verifying a customer or members’ identity to prevent corruption and money laundering. The purpose is to prevent financial institutions from being used to finance illicit activities. First Tech and all other financial institutions must conduct due diligence when validating your identity on any type of loan, so the responsibility to keep your name and information secure does not fall entirely on you.
However, it’s advantageous for you to keep your financial and personal information up to date, so make sure you check in occasionally with your bank to ensure your documentation is current.
Determining whether or not anyone else in your family has been affected by this fraudulent loan application is the next step. If you have dependents, joint accounts or other family members tied to your accounts, make sure their information and credit rating is unaffected, and any fraudulent activity linked to them is flagged.
It may be helpful to have the credit reporting bureaus proactively set up a fraud alert on your credit report, which adds an extra level of scrutiny for lenders to prove that the person applying for credit in your name really is you. You can set fraud alerts to last for a short period of time, or have them set for up to seven years.
Even with fraud alerts set up on your credit report, it is smart to proactively pull your credit report and review activity on a regular basis. Review all of your social and e-commerce activity, and look out for any anonymous or suspicious transactions that you know are not yours. As soon as you can prove you are not the person carrying out these transactions, bring this proof to the financial institution that signed off on the fraudulent loan in your name. It may be necessary to freeze your credit and lock down any further fraudulent activity.