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Credit fraud, also known as identity fraud, is becoming increasingly common with every technological advancement. There are two types of credit fraud. One involves someone accessing an existing account of yours and fraudulently using your money or credit card to purchase items for themselves.
The other involves someone opening a new credit card in your name, without your knowledge. Victims of new account fraud are three times as likely to be unaware of the problem for more than a year. Banks are working hard to crack down on new account fraud, but existing account issues can be harder to catch and require your involvement.
How Credit Fraud Happens
Often, credit fraud happens when large companies’ databases are maliciously hacked. You’ve likely heard about some of these in the news. Target, Home Depot, eBay and JPMorgan are just a few corporations who’ve been hacked. The hackers take the credit card information they access and treat themselves to a shopping spree with your money.
New account fraud is a bit trickier since they’ll need information like your social security number. For example, when hackers access the vital information stored in a major insurance company's database, those hackers could open fraudulent credit card accounts.
According to the Bureau of Justice, identity theft in 2012 added up to more than $24.7 billion dollars.
A credit monitoring service can be beneficial in catching credit fraud early. Depending on the service, some may also help you solve the problem and get your credit rating back more quickly.
There are many credit monitoring services on the market. Do your due diligence to be sure they’re what and who they present themselves to be. Identity Guard and LifeLock are two of the most popular credit monitoring services available. Both have different plans and different monthly rates. Think about your credit and banking habits as you review the offerings to choose the one that’s best for your lifestyle.
The FTC recommends, “ask 1 of the 3 credit reporting companies to put a fraud alert on your credit report. They must tell the other 2 companies. An initial fraud alert can make it harder for an identity thief to open more accounts in your name. The alert lasts 90 days but you can renew it.”
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