How having your identity stolen can stop you from getting a loan
Identity theft is an increasingly growing problem in Australia. The annual cost is estimated to be around $2.2 billion including government agencies and individuals.
A recent report from identity theft and cyber support business IDCare found that consumers in Australia and New Zealand are especially vulnerable to ID theft during holiday periods, when attempts at ID theft peak.
Identity theft is one form of cyber fraud and happens when your personal information is stolen by fraudsters to apply for loans or to open credit accounts or mobile phone accounts - ultimately impacting your credit history without your knowledge.
Finding out your identity has been stolen
The most common way is when your bank notifies you of a suspicious credit card transaction or you're denied straightforward credit such a store credit card or credit card limit increase. The suspicious credit card transaction is easily managed with a call to your bank but being denied credit or a store credit card when you have an impeccable history of paying your accounts, is a clear warning sign.
So, get your credit reports to check for any suspicious credit activity. Any information on your credit report that is not accurate, such as accounts or defaults you are not aware of, or credit and loan enquiries from lenders that you did not apply to, could indicate that you are a victim of ID theft.
The financial consequences caused can last for months or years, and in most cases, prevent you from accessing any further credit or loans from your bank or credit provider until the issue is resolved or you are able to restore your good credit.
This might end up hurting your plans of buying that dream home, or first investment property, or even buying a new car that you have been planning for a long time.
More than monetary loss
According to IDCare, identity theft and credit fraud can trigger a host of emotional reactions and can have long lasting effects on the victim's life, including their mental health. These responses can range from feeling irritated and angry to being uncertain and anxious about what the future holds.
By and large, identity theft is a faceless crime and leads to many victims feeling helpless to protect themselves or fight back. IDCare recommends promptly pursuing next steps, whether it is applying for a new ID, speaking to your bank to block your credit card or contacting the credit reporting bodies to put a ban on your credit report. And importantly, recognise the mental impact ID theft can take on you; take the time you need, and where appropriate seek support, to cope with the emotional stress ID theft can cause.
New changes to prevent credit fraud
From February this year, it has become easier for consumers to protect themselves against credit fraud arising from ID theft, thanks to the changes to the Australia's credit reporting system.
Under the changes approved by The Office of the Australian Information Commissioner (OAIC), if you believe you have been or are likely to be a victim of fraud, you can request a ban on your credit file to one of the three credit reporting bodies (Experian, Illion, or Equifax), who will then, on your request, co-ordinate the ban across all the other CRBs.
Until now, consumers had to contact each credit reporting body separately to request this protection.
The credit reporting body will put a 'freeze' on your credit file for an initial period of 21 days, with the option to extend the ban period if needed. This will ensure the credit reporting bodies do not disclose information on your credit file to any lender unless you provide written consent for them to do so.
By offering a single point of contact with the CRBs, these credit reporting changes will bring greater convenience, peace of mind and protection for privacy.
How to protect against ID fraud
With Comprehensive Credit Reporting now a reality in Australia's credit reporting system, credit reports now contain more detailed information about your use of credit, including monthly updates on your repayment behaviour, so make sure it is accurate and up to date.
You have a right to a free credit report from each of the credit reporting bodies annually so get yours to check for any suspicious credit activity.
As soon as you note suspicious credit activity, contact the credit reporting body to place a ban on your credit file.