Fraudulent activity on your credit report can be an indicator of identity theft. Fortunately, credit monitoring can help you quickly identify potential issues, so you can take quick action to limit the damage. To easily keep track of what’s happening with your credit file, we recommend using a professional credit monitoring service like the one we offer.
Your credit report includes a record of all the times you’ve ever applied for and received credit — such as a car loan or home mortgage. In addition, it tracks other key financial details, like your payment history, credit limit, and account balances.
All of this information is factored into your credit score, which indicates how risky it is for businesses to lend you money. The higher your score, the more credit you may have access to, and the lower your interest rates may be for repayment. This is why credit monitoring — or the practice of keeping a close eye on your credit — is so important.
By monitoring your credit carefully, you may be able to take immediate action to limit the damage if fraudulent activity has occurred.
With this in mind, let’s take a look at the different types of credit inquiries, and how to recognize and report credit fraud.
Types of credit inquiries
With most credit applications, creditors use your Social Security number to request — or “pull” — a credit report from one of the three major credit bureaus (Equifax, Experian and TransUnion). Those requests show up on your report as “new inquiry.”
A hard credit inquiry is used by lenders to determine whether or not to lend you money. When you apply for a mortgage, credit card, car loan, or personal loan, your lender will typically run a hard credit inquiry to check your credit and payment history. Having too many hard credit inquiries in your credit report may negatively impact your overall credit score.
A soft credit inquiry is only visible to you and doesn't impact your credit score. This type of inquiry may be used to see if you qualify for special pricing or pre-qualified promotional offers, or occurs when a prospective employer runs a background check on you. Checking your own credit score counts as a “soft” check.
In addition to being one of the most common forms of credit activity, hard inquiries are often the clearest early sign of possible fraud because they indicate an attempt to increase credit limits or establish new accounts.
Lenders typically report to the credit bureaus once a month. The bureaus then produce updates, which are sent to credit monitoring services like ours. If you’re using a credit monitoring service, that’s when you’ll receive notifications about recent activity on your report.
Some of it may be unfamiliar. You may not recognize a creditor’s name, for example, but that doesn’t necessarily indicate fraud. Some popular retailers issue store credit cards through third-party companies with names that may be unfamiliar.
How to spot credit fraud in your report
On the flip side, unfamiliar activity in your credit report could mean your personal information has fallen into the wrong hands. Here are some questions to ask yourself to determine if the activity in question is legitimate:
Have you applied for credit in the last 30 days?
Did you co-sign with anyone in the last 30 days?
Have you had any interaction with the company listed in the report — or one of the company’s third parties — in the last 30 days?
If the answer to one or more of the above is “yes” and you’re an Allstate Identity Protection member, we can dig a bit deeper to confirm that any alerts were triggered by your actions and not someone else’s. If you did none of the above, we may also contact the third party (store, bank, etc.) to investigate further.
If you’re not a member and notice suspicious activity in your credit report, consider contacting the three major bureaus and freezing your credit — which prevents lenders from accessing your credit report. Here’s how to get started:
Benefits of using a credit monitoring service
Regularly checking your credit reports for signs of fraudulent activity can be made easier with a credit monitoring service like the one we offer.
With a credit monitoring service, you’ll receive alerts about your credit activity — for example, a credit card you opened. In some cases, monitoring may also alert you to suspicious activity.
If you have an Allstate Identity Protection plan that includes credit monitoring:
Make sure you activate our credit monitoring service. To get started, log into your account dashboard and click the Credit Monitoring tab
If you receive an alert from us about activity that you don’t recognize, give us a call and we’ll work together to resolve it