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Why don't we check our credit reports?

We all know about identity fraud and the various ways this can happen, but what about the tools to fight identity fraud?

Well, there are industry measures in place to stop people’s identities being used fraudulently like the work of the Dedicated Cheque and Plastic Crime Unit and CIFAS, the Fraud Intelligence Sharing System and the banks use of intelligent fraud-detection systems, but we all know that consumer responsibility is also critical in prevention of this growing crime.

One of the ways consumers can take responsibility is through proper management of their credit report, which is widely recognised as a valuable prevention weapon in the fight against identity fraud.

In the UK however, we seem to have a bit of a problem in using this useful monitoring tool. Recently CPPGroup Plc (CPP), questioned over 2,000 UK adults and we found some interesting, if not alarming, statistics.

The first point of reference was that almost 900,000 adults had their credit rating damaged by identity fraudsters and that it took on average just over 400 days to nurse a credit file back to full health with 50 per cent of adults not getting the problem corrected or having no idea if their credit status is back on track.

Secondly, and perhaps more worryingly given some of the latest identity fraud statistics published by the National Fraud Authority that 1.8 million people are adversely affected by identity fraud every year, is that only 4 per cent of us bother to check our credit reports on a monthly basis as recommended by experts, and half of people admit they have never checked their credit report, ever. Four per cent of people said they didn’t even know what a credit report is.

Not surprisingly, the majority of people only found out they had a bad credit rating when it really mattered; when they applied for a mortgage, loan or credit card.

So, do we have widespread ignorance in the UK about the use of credit reports and what they can do to protect consumers? Perhaps more needs to be done on how credit reports are a useful identity management tool and a critical part of personal identity prevention.

The inherent value of regularly checking your credit report is clear when you consider that Experian has said “victims of fraud typically only discover the fraud when they review their credit reports. In 2009, nearly three in five of victims discovered that their identity had been compromised by checking their credit report.” (Source: The Insight Report – Victims of Fraud survey – March 2010).

So, what are the consequences of having your credit rating wrecked by identity fraudsters? Well, nearly half of our survey said it cost them financially, with the monetary repercussions averaging over £7,000 enough to put many people in serious financial difficulty. Costs included individuals losing out on low interest credit cards and loans (48 per cent), refused a mortgage (20 per cent) and lost earnings (10 per cent). Whilst, one in twenty (5 per cent) had to pay legal fees.

It’s not surprising, therefore, that a damaged credit status has an emotional impact with stress, strained personal relationships, sleepless nights and time taken off work reported as a result.

It’s also clear, despite huge media attention over the last five years, that consumer ignorance is playing a role in helping identity thieves go undetected. The vast majority of people still have no qualms supplying their personal data online, including names, dates of birth and addresses, where it is visible for all to see, and use.

With credit reports being such a useful prevention tool, we need to encourage more people to adopt a proactive stance to using them on a regular basis, in order protect their identities and ensure they themselves are not a weak part of the protection chain.

Like many things in life, education to influence a positive change in behaviour, is what is required.

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Comments: (3)

John Dring
John Dring - Intel Network Services - Swindon 24 November, 2010, 14:01Be the first to give this comment the thumbs up 0 likes

It would definitely help if your credit rating was not affected by a query.   Last I knew, just checking your rating is counted and do it too often and it counts against you in future transactions needing clearance?  So being too proactive can harm your credit rating?

 

A Finextra member
A Finextra member 24 November, 2010, 15:47Be the first to give this comment the thumbs up 0 likes

It is worth reminding consumers that they can obtain their Statutory Credit Report for a mere £2 from the credit agencies.  This is a legal right (in the UK).

For some reason, the credit agencies don't go out of their way to publicise this.  Or make it easy.

Perhaps that is why?

John Dring
John Dring - Intel Network Services - Swindon 24 November, 2010, 16:03Be the first to give this comment the thumbs up 0 likes

Well, the last time I did it, it was about £12, and covered with a warning to the effect that checking your credit too often can 'score' against you (just as the warning you get when a 'lender' needs to check your rating - do too many checks and you are a bad or suspicious profile - snookered?)

 

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This post is from a series of posts in the group:

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The risks from Cyber cime - Hacking - Loss of Data Privacy - Identity Theft and other topical threats - can be greatly reduced by implementation of robust IT Security controls ...


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