What You Should Know about New Account Fraud

New account fraud is one of the most feared types of identity theft. An identity thief commits new account fraud by stealing someone’s personal information and using it to open up new financial accounts. Typically, all a thief needs to commit new account fraud is the victim’s name and Social Security number (SSN). With this information, the thief can open credit cards, qualify for loans, and even take out insurance policies in the victim’s name. The spending spree that ensues can cost the victim thousands of dollars and devastate his/her credit rating. Read on to learn how to spot new account fraud and prevent it from occurring.

Detecting New Account Fraud

Detecting new account fraud is particularly difficult because the thief often uses a post office box or alternate address to set up the accounts. Consequently, the victim never receives notification of the existence of the new accounts, whether in the form of account statements, overdue balance notices, etc. Some victims of new account fraud take years to realize that something is amiss, which greatly increases their liability and risk for the identity thief’s crimes. Here are few signs of new account fraud that you should look out for:

• You receive information about credit cards or other accounts you don’t recognize
• You were unexpectedly turned down for a loan, credit card, or other new credit
• Strange penalties, accounts, or other irregularities appear on your credit report

Preventing New Account Fraud

On average, new account fraud victims must pay $1,180 out of pocket to rectify the damage the identity thief causes. To save yourself this expense and trouble, you should do everything in your power to prevent new account fraud. Here are a few suggestions on how to avoid this form of identity theft:

• Check your credit report regularly. So many identity theft crimes could be prevented if all consumers checked their credit reports on a regular basis. The new accounts an identity thief opens in your name will still appear on your credit report, so you can detect the crime before it causes more serious problems.

• Sign up for a credit monitoring service. Credit monitoring is a very affordable service that tracks changes to your credit report and informs you of them immediately. This way, you do not have waste your time checking your report constantly. Credit monitoring companies usually charge a monthly fee for this service.

• Put a fraud alert on your credit reports. A fraud alert forces creditors to double-check an applicant’s identity before issuing credit. You can place a fraud alert on your reports at any time; you don’t necessarily have to wait until fraud occurs. Contact any one of the three major credit bureaus to place this alert on your reports.

• Order a credit freeze. A credit freeze prohibits anyone from viewing your credit report except the companies with whom you already do business. Each state has different rules on security freezes, but your credit bureau can give you more information.