Credit card fraud is a growing concern for consumers, as fraudsters are becoming more sophisticated in how they steal personal and financial information. Unfortunately, the effects of credit card fraud can go far beyond the mere financial losses from unauthorized charges. It can also affect your credit score and credit reports, causing harm in a variety of other ways.

First, let’s start with the basics. A credit report is a record of your credit history, including information about your credit cards, loans, and other forms of credit. There are two types of credit card fraud. One is account takeovers, which means it’s your credit card, but a fraudster has run unauthorized, fraudulent charges on it. The second type is account generation, meaning the fraudster has opened a credit card in your name without your consent.

Regardless of the type of credit card fraud, these charges can end up showing on your credit report as delinquent payments. Even if the fraudster was never issued a credit card, the mere presence of hard inquiries can have a negative impact on your credit score. This can result in a lower credit score and make it more difficult for you to get loans or other forms of credit in the future.

Errors in your credit report can also have long-lasting consequences for your financial health and stability. For example, certain jobs with security clearance examine the credit reports of applicants and if you have delinquent debts or too much credit, you could be denied that job. Errors on your credit report can also make it more difficult to rent an apartment or buy a house, as landlords and lenders may be hesitant to extend credit or housing to someone with bad or even moderate credit.

It’s important to monitor your credit reports regularly to detect any signs of fraud or errors. Each credit reporting agency offers free annual credit reports (weekly now because of COVID) where you can review your detailed credit report. If you suspect that your information has been used fraudulently or if you find errors on your credit report, it’s important to act quickly. You should immediately dispute the fraud or errors with the credit card company and the three major credit reporting agencies (Equifax, Experian, and Trans Union).

Disputing errors on your credit reports can be a complex process, but it’s an important step in protecting your credit. You can dispute the errors by sending a detailed letter to the credit reporting agencies and by providing documentation to support your claim. Credit reporting agencies are required to investigate your dispute and, if the errors are found to be valid, they must correct them.

However, if you wait too long to dispute the errors, the information may become more difficult to correct. Especially in incidents of identity theft or credit card fraud, where you are trying to prove the negative, i.e. that it wasn’t you that made those charges.

Credit card fraud is more than just instant money out of your pocket. It can result in errors on your credit report that can be a smoldering financial flame that does lasting damage to your financial future. It’s important to monitor your credit reports regularly and act quickly if you suspect fraud or errors. Disputing errors on your credit reports can be a complex process, but it’s an important step in protecting your credit and avoiding long-term harm.

Other Resources:
  • Credit Freeze FAQs
  • Nerd Wallet: Dispute Credit Report
  • Credit Karma: Dispute Error Credit Report