Suppose you apply for a credit card online, fairly confident that your good credit rating will win you easy approval. But you are shocked when your application is denied because of poor credit. What’s happened? You may have been a victim of credit card fraud, and it has damaged your credit rating.
These days it’s all too easy to become a victim of this type of fraud. Consider the recent security breach at Target, Neiman Marcus and other stores. If you were one of the people unlucky enough to have your credit card information stolen, it may not be too long before thieves are out there using your information.
There are varying levels of credit card fraud. In many cases, thieves steal your credit card number and run up your account balance by making a number of large purchases. Unless you check your balance weekly you may never know what’s happened until you open your monthly statement and see hundreds or thousands of dollars in charges that you didn’t make.
In some cases, a thief will use your stolen credit card information to open other credit accounts and make large charges on them. The bills are sent to a different address than your home, so you may not be aware of the problem for some time. You’re often left with a big financial mess to untangle.
Take immediate action
You need to take action immediately if you suspect that you’ve been the victim of some kind of credit card fraud.
- Check your account statement carefully, and flag any charges that you don’t recognize. (If you don’t recognize a charge, but are unsure of whether or not you’ve made it, your credit card company can usually help with additional information.)
- Call your credit card issuer and let them know which charges are fraudulent. They will probably cancel your card immediately and send you a new one. (Don’t forget to change any automatic payments that you’ve set up to handle monthly bills.)
- Contact one of the three major credit card bureaus (Experian, Transunion and Equifax) and ask them to put a fraud alert on your account. A fraud alert will let credit card companies and other lenders know that someone might be using a stolen credit card in your name to open other accounts and that they should verify it with you if they receive such requests.
Fraud alerts last for 90 days. You can also get an extended fraud alert placed on your account, which lasts seven years. This requires creditors to contact you by phone before they open any new accounts in your name.
You only have to call only one credit bureau to place a 90-day fraud alert on your account; the one you select will contact the other two, and they will then place fraud alerts on your record with them.
- Check your credit report to make sure that thieves have not opened any other accounts in your name. If you find a problem, report it immediately to the credit bureau.
- Under federal law, you’re entitled to one copy of your credit report from each credit bureau each year. If you’ve been a victim of credit card fraud, you’re entitled to one additional copy from each of the three bureaus each year.
- Keep a close eye on your credit card statements in the coming months so you can spot any other fraudulent activity. It’s a good idea to get into the habit of checking your accounts once a week.
It may take time to get your credit report straightened out and your good credit rating restored, but it’s worth the effort. And the next time you apply for a credit card, if your credit is really good you should find that your approval goes through easily.