Someone took out a loan in my name: How can I check for fake loans and prevent future scams?

How a fake loan can affect you

There are legitimate ways someone can take out a loan with your name attached. For instance, you can apply for a joint loan with a spouse or a family member, or be a guarantor for another loan applicant. Having power of attorney over another person also allows the holder to take out a loan in the other person’s name. However, such scenarios share one thing in common — you know that this loan exists, and the application wasn’t submitted behind your back.

Any loan application submitted and approved without your knowledge or consent is considered illegal. It’s often a sign of identity fraud — a criminal taking your personally identifiable information, like your full legal name and Social Security number, and misusing it for their benefit. If an unauthorized loan is discovered, you might be prosecuted for it because legal authorities connect it to your name, not the criminal’s.

Scammers usually select personal loans for their schemes because they don’t require collateral, and the terms call for fixed repayments, which they hope the victim will overlook. However, car and mortgage loans are also popular.

Loan fraud done using your name can have long-term negative consequences on your finances. Loan repayments appear in your payment history and can drop your credit score. It can lower your chances of receiving another loan in the future, especially if you didn’t make timely repayments. If a loan was taken out in your name, you have the legal responsibility to pay it back. That’s why it’s important to prove that identity thieves have taken out a loan in your name without your knowledge.

In addition to false loans, your sensitive personal information can be misused for other scams. Some notable cases of identity theft in recent years have included mishandling credit reports for credit card fraud, claiming millions of dollars in fraudulent tax returns, and using children’s Social Security numbers to commit financial fraud.

Signs that someone took a loan under your name

Applying for a loan using another person’s name is not a subtle crime. Sooner or later, you can start noticing signs that someone has misused your personal information for their own financial gain.

New and unknown bills

If you start receiving bills for monthly repayments you’ve never signed up for — for instance, to cover a car loan even though you haven’t leased a new vehicle — someone may have issued a loan with your name on it. In this case, contact the leasing office to determine if your personal information has been misused.

However, keep in mind that this could be a different scam. Criminals may be sending you fake bills as a phishing attack to obtain your personal details. Check that the contact information on the bills is correct before reaching out.

Repayment reminders

Similarly, if you receive reminders to return a loan you haven’t taken out, you may have been signed up for an unauthorized loan. You must get in touch with the loan provider immediately. A lack of repayments will appear in your financial records, and you may be forced to pay additional penalties and fees. Unpaid loans also reflect negatively on your credit score.

Sudden credit score changes and alerts

Loan issuance is usually based on the applicant’s credit score. Once you’re issued a loan, your credit starts fluctuating. So if your next credit report arrives and your score has suddenly tanked even though you haven’t made any big purchases, someone may have misused it for a fraudulent loan. If the credit company notices irregularities, it might issue a warning about suspicious activity.

Warnings from debt collectors

If you don’t know about a loan that was taken out in your name, you can’t repay it. Unfortunately, not knowing that you’ve become a victim of financial fraud might not shield you from prosecution. If the lending company declares you unwilling to pay, you might get a visit from debt collectors who can take legal action against you. It’s important to have official proof that someone else took the loan in your name without your knowledge to avoid legal liability.

How to check if someone took a loan in your name

If you suspect someone has applied for a loan using your name without your permission, you have a few ways to check and confirm it.

• Check your credit history for sudden changes. If someone takes out a loan in your name, it will quickly appear on your credit report. You can request a free credit report from one of the three credit bureaus to compare details of your financial activity over time.
• Inquire with a lending company. A fake loan in your name will impact your likelihood of receiving a new one. You can contact a financial company to ask about your lending history and risk level as a potential client. Having an unpaid loan under your account will mark you as a higher-risk borrower.
• Use a credit monitoring service. NordProtect’s credit monitoring is an easy method for tracking credit changes. It displays your credit score, updates your credit file report monthly, and alerts you if any suspicious activity is detected. Using NordProtect, you can see and dispute any charges you haven’t made yourself, including unauthorized loan repayments.

What to do if someone took a loan in your name

The red flags of fraudulent loans often point to identity theft. You have solid proof that someone has applied for a loan in your name. Now you need an action plan to protect your financial assets and personal information. 

Report the false loan and put up a fraud alert

Gather proof that someone has taken a false loan in your name, including your credit reports and bank statements, and report them to the lending company, your bank, the three main credit bureaus — Equifax, Experian, and TransUnion — as well as the Federal Trade Commission (FTC).

You can also request your credit bureau to issue a fraud alert. This alert will inform other lenders and financial institutions that your personal information is compromised and prevent scammers from taking out further fraudulent loans or misusing your data. Setting a fraud alert won’t prevent you from using your credit cards, allowing you to continue your necessary financial operations.

Secure your financial accounts

If you suspect that scammers might escalate from the loan to actively misusing your current assets, you must lock down your accounts. Freeze your credit to prevent it from being misused. With your credit frozen, scammers won’t be able to take out new credit cards or loans using your name.

Report identity fraud

Likewise, you must officially report your identity theft. Inform the Social Security Administration that your identity has been compromised. They will help you with the next steps of identity recovery and updating your personal details. You should also file a police report to have official proof of identity fraud taking place.

Dispute any charges to your account

If the scammers applied for a personal loan, you might be forced into making fixed monthly repayments. Dispute these charges with your bank and inform the lending company that you did not apply for the loan, and your financial information has been compromised.

Get legal counselling

Financial crime resolution can be lengthy and resource-intensive. Consider speaking to a legal professional to get guidance on protecting your assets and personal identity during investigations into the fraudulent loan.

Set up identity theft protection

Identity thieves can cause a lot of damage with your personal information. They can use it for insurance fraud, claim tax returns in your name, or impersonate you for phishing attacks and other scams. It’s strongly recommended that you set up identity theft protection services to prevent your sensitive information from being exploited.

How to prevent fake loan attempts in the future

Unfortunately, once your personal information has been breached, the risk of it being misused more than once goes up. However, you can protect your personal information to prevent fake loan applications and other scams from affecting you in the future.

• Check what you sign for. Do not co-sign any loans that you’re unfamiliar with, and don’t agree with lending terms that you haven’t reviewed yourself first. Learn to identify scam websites and phishing attempts — check URLs and email attachments carefully, and don’t log in to any service if you’re not certain it’s legitimate.
• Keep track of your credit activity. If something’s up with your accounts, your credit history will be the first place to show it. Monitor your credit and, if something looks off, contact your credit provider immediately.
• Limit where you share your financial details. Scammers can develop phishing sites to obtain personal information from unsuspecting users. Make sure that you only enter your bank details on reliable websites.
• Secure your accounts. If you’ve experienced a data breach, you should change the login credentials of your accounts immediately. Use strong and unique passwords for more reliable protection and never reuse the same password for multiple accounts.
• Sign up for an identity theft recovery service. Stolen information is a valuable commodity on the dark web. With NordProtect’s identity theft recovery service, you can prepare for potential future breaches and, if you become a victim in the future, get up to $1 million to help with identity theft recovery expenses.
• Apply for a new Social Security number. If someone has misused your Social Security number without your permission, you can apply for a replacement with the Social Security Administration. They will evaluate your case and may issue a new number.
• Use dark web monitoring. Even after updating all possible personal information, it might not be safe from future breaches. To keep yourself alerted, you can sign up for dark web monitoring. NordProtect tracks your email address, Social Security number, and phone number on the dark web. If any of this information is spotted in a data breach, the dark web monitoring tool alerts you immediately.