This past week I was the victim of identity theft. Somebody applied for a Small Business Administration loan in my name. Fortunately, the SBA detected the fraud and declined the loan. Yet a hard inquiry still ended up on my credit report. Here’s how I got it removed in under 24 hours.
How to detect fraud on a credit report
Before we can deal with a hard inquiry, we need to know about it. The easiest way to keep an eye on your credit report is through one of your credit cards. Most major credit card issuers offer free access to your credit score, your credit report, and credit alerts.
I’ve signed up for a number of these services. I track my credit through Discover, American Express, Capital One and Chase. It may seem like overkill, although after what happened this past week, I’m glad that I do. In some cases, you have to carry the credit card to get access to your credit score and report. In others you don’t. For example, Discover offers credit reports and scores for free, whether you carry a Discover card or not.
You can find a list of credit cards that offer free credit scores and alerts here.
Thanks to the alerts received from Capital One, I discovered a hard inquiry on my Experian credit report. Here’s what I found:
The Small Business Administration (SBA) reported this hard inquiry to Experian in September. I’ve had no dealings with the SBA, ever. So I knew immediately that this was either a mistake or fraud. I suspected fraud because it seemed unlikely that the SBA would mistakenly have my social security number and other identifying information and put an inquiry on the report.
How to remove a hard inquiry from a credit report
There are hard and soft inquiries. A hard inquiry, also called a hard pull, will lower your credit score. A hard inquiry occurs when you apply for a loan. If you apply for a credit card or car loan and the lender checks your credit report and score, it will show up as a hard inquiry on your credit report.
A soft inquiry, or soft pull, is one that does not affect your score. The best example of a soft inquiry is if you check your own credit report. Checking your score or report will not affect your credit score.
The SBA inquiry was a hard pull. The process of getting it removed involved two steps.
Step One—contact the lender
The first step in removing the hard inquiry was to call the SBA. Fortunately, SBA contact information was available in my Experian credit report. In less than 10 minutes on the phone with the SBA they identified the issue, agreed that it was fraudulent, and marked the transaction accordingly. The SBA had already rejected the loan application because they suspected fraud.
The SBA representative then gave me a number to call Experian. He advised that I should dispute the hard inquiry as fraudulent. Doing so, he told me, should get it removed in 24 to 72 hours.
Step Two—contact the credit bureau
Following the SBA’s advice, I called Experian. In a five minute phone call I was able to dispute the inquiry based on fraud. It was less than 24 hours later when I received confirmation that the inquiry had been removed. Beyond disputing the inquiry, the Experian representative made two recommendations.
First, she suggested I add a fraud alert to my credit file. A fraud alert notifies potential lenders that my identity has been compromised. The result is that lenders will take steps to ensure that it’s actually me who is applying for credit. This may take the form of a telephone call to the number on file with the credit bureaus.
Note that a fraud alert is different from a credit freeze. A credit freeze blocks lenders from pulling my credit report. It’s a step I’ve also taken, but it’s more extreme than a fraud alert. With a fraud alert, Experian was able to notify the other two credit bureaus who also added a fraud alert to my file. With a credit freeze, you must do this with each of the credit bureaus.
The process is simple. It took less than five minutes to freeze my credit with each credit agency. In the case of TransUnion, I was able to use its automated system. If I ever need to apply for credit, I’ll need to remove the freeze temporarily.
Report identity theft to the FTC
Second, she suggested I report the identity theft to the Federal Trade Commission. You can do this at an FTC run website called identitytheft.org. Based on my review of that website, it would appear that the FTC doesn’t treat as identify theft the attempted but unsuccessful opening of an account.
What the FTC treats as identity theft is if someone is successful in opening up an account or getting a loan in your name. Because that didn’t happen, there was noting to report. The website, however, is an excellent source of information on protection your identity and credit.
The key to dealing with identity theft is to monitor your credit. Had I not been using credit card services to monitor my credit, I may have never learned about the fraudulent inquiry. Beyond monitoring your credit, consider a credit freeze. It’s a bit of a hassle to remove the freeze when you need to apply for a loan, but well worth the peace of mind.