How to use your credit score and credit report to prevent identity fraud

You care about your finances. You've managed to build up a great credit score by making responsible decisions, limiting financial risk and generally being a dependable customer when it comes to credit services.

That being said, it is still important that your credit score stays front of mind. This is as there are still risks that can negatively impact your credit. One such risk is identity theft.

Getting impacted by identity theft is frustrating, as it feels out of your control. You've been doing everything right, so why should your credit get impacted? Can good habits and a careful approach to checking your credit score and report really help you to avoid the troubles that come along with this very invasive type of fraud?

The answer is yes — with the right strategy and setup, you can reduce the risk of identity fraud while keeping a close eye on your credit score.

Let's look at some key issues around identity theft and why it is so important to protect yourself against it, then dive into the ways in which you can use your credit score and credit report to do exactly that.

Identity theft in Australia is a serious concern

Identity theft is one of the fastest-growing crimes in Australia. It impacts almost 1 in 5 Australians, costing them time, money, and their financial health.

In 2021, 1 in 5 of respondents to a representative survey said they had suffered some type of misuse of their personal information during their lives, according to The Australian Institute of Criminology.

What is identity crime and identity fraud, exactly?

The Australian Federal Police define identity crime as ‘activities/offences in which a perpetrator uses a fabricated identity; a manipulated identity; or a stolen/assumed identity to facilitate the commission of a crime(s).'

Identity fraud, also called identity theft, is a specific type of identity crime. A criminal will use the identity of an individual as the means to some kind of nefarious ends. That could mean opening credit cards in the victim's name and using them (with no intention of paying the bill), attempting to withdraw money from a victim's bank account or another type of plot.

Identity crime can cause major problems. The financial aspect of it can't be overlooked — unsurprisingly, no one wants to be exposed to a financial burden on their credit or savings account.

Unfortunately, the damage doesn't stop there. Identity theft frequently involves actions that, although not the direct intent of the crime, can put negative marks on your credit report. And that leads to a drop in your credit score. The last thing you need is to have a negative impact on your score which can reduce your chances at securing credit when you really need it, such as to purchase a home or car. This can also be frustrating if you've put in significant time and energy into improving your credit score, just for it to be reduced by factors out of your control.

Protecting yourself from identity fraud: Three key steps

Now that we know the impact that identity theft can have, here are three key steps you can take to keep your identity and finances protected.

There are proven steps you can take to reduce the chances of suffering from identity fraud. While none of the suggestions offer complete protection, taking many of the steps outlined below can reduce your level of risk.

It's important to remember that identity fraud can involve real-life documents as well as digital information, so a broad strategy is best. Consider these three key steps:

Limit access to your mail and paper documents

Physical documents can be a valuable source of information for identity thieves. You can make your mail more secure by:

  • Installing a locked mailbox that is more difficult to access than the regular version.
  • Putting a hold on your mail whenever you travel or will otherwise be away from home for a significant period of time.
  • Promptly arrange for mail forwarding when you move, and update your address with every lender, utility provider and other business that sends you bills and other important information.
  • Shredding or securing documents after you've reviewed them.

Making your digital activity more secure

Digital information is a common starting point for criminals engaging in identity fraud. You can limit your risk by:

  • Being careful about the things you do on unsecured wifi networks and public computers. Criminals can potentially access information sent through unsecured networks, so take care of banking and similarly sensitive tasks on a secure network.
  • Thinking before you act when making purchases online. Only use secure sites (https://) and secure payment systems, make sure you're using a company's actual web address — as opposed to a lookalike URL created by a scammer — and keep an eye out for misspellings, odd formatting and other signs that a website may not be legitimate.
  • Be aware of scams and phishing traps. Emails, text messages and phone calls from scammers often use pressure tactics to make people act before they think. You can verify the identity of the person sending the message or get in touch with the company they claim to represent before moving forward.

Credit score and credit reports: Reviews and automated alerts

Monitoring your credit report and signing up for credit score alerts from GetCreditScore can keep you more informed, meaning you're ready to act if something goes awry.

  1. Sign up to receive your free credit score from GetCreditScore. Then, look out for alerts about changes to your credit score. A large change in a short period of time may indicate potential fraud.
  2. Review the credit and identity products available from Equifax. You can request a free copy of your credit report every 12 months for a detailed review, as well as purchase additional protections like Identity Guard Insurance and/or Identity Watch which will alert you if your listed identity documentation numbers and passwords are circulating on the dark web.

Has your personal information been compromised?

Check out these valuable tips from Equifax to tackle identity theft against a possible data breach.

Find out more


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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.