A delinquent account is one that is behind on the required payments. Delinquency is often referred to in the context of credit cards, but loans of all types and certain other unfulfilled payment obligations can be reported as delinquent too. This designation doesn’t just mean that you have a balance on your account or that you missed your due date by a few days. Most lenders will not report a delinquency until a payment is 30 days late, which means you’ve missed two consecutive due dates.
Having a delinquent account listed on your credit report can be detrimental to your credit score, and the damage increases the more delinquent an account becomes. That makes it very important to either pay the amount in question, if you legitimately owe it, or follow fraud-reporting protocols if not. Delinquency could, for instance, be the result of an identity thief having used your personal information to obtain credit in your name or gain access to an existing credit account in order to divert account communications to his or her address so you wouldn’t notice until significant charges had been racked up.
Here’s what to do if you suspect fraud:
Phase 1: Containment
- Contact The Creditor: You should be able to get some useful information by calling the financial institution or debt collection company to whom you supposedly owe the delinquent payment. Ask to speak with a fraud specialist and try to determine when the account was opened, what address is associated with it and when the last payment was made.
Make sure to take detailed notes during this call, including the name, ID number (if any) and direct phone number of the representative that you talk to. Also be sure to ask about the possibility of putting a freeze on the account in question so that additional charges cannot be made while the creditor looks into the possibility of fraud.
Hopefully, you’ll find that the delinquency listed on your credit report is merely the result of a clerical error, but that, unfortunately, is a rather unlikely best-case scenario.
- Review All Three Major Credit Reports: You already have your TransUnion credit report from WalletHub, and while Experian and Equifax credit reports contain largely the same information, there are some differences in terms of their data sources and the financial institutions that use them. Seeing how, and if, this delinquency is listed on your other reports may provide additional context about whether it’s fraudulent. This will also give you the opportunity to thoroughly review each of your files for other suspicious listings.
You’re entitled to a free copy of each of your major credit reports every 12 months through the government-sponsored website AnnualCreditReport.com. If you have been turned down for credit in the past 60 days, you also have the right to a free copy of the credit report the lender used to make its decision.
- Place A Security Freeze (And Fraud Alert) On All Three Reports: A security freeze completely prevents most parties from viewing your credit report, though exceptions do exist, such as for the government, existing creditors, collection agencies, creditors who prescreen you for offers and yourself. You must contact TransUnion, Experian and Equifax individually to put a freeze on each report, and a fee may apply each time you freeze and unfreeze a report.
However, the cost — $2 to $15, depending on your state — pales in comparison to the value of gaining complete control of your credit reports and thereby preventing anyone from applying for or opening a new credit account without your consent. That’s especially true when you consider that many states allow the elderly and victims of identity theft to freeze and unfreeze their credit reports for free.
- Update Passwords, PINs & Contact Info: In order to limit the scope of this case of suspected identity theft and prevent further intrusion into your financial life, run anti-virus software on your computer and then update all passwords and account PINs associated with your open credit cards and loans.
Making sure your computer is well protected may help patch up a vulnerability that allowed your personal information to be obtained in the first place. Updating account security thereafter helps prevent further incursions and allows you to safely confirm that each account has your correct address on file. You may even want to update your contact and alert preferences for more controlled visibility of account activity.
Phase 2: Escalation
- File An Identity Theft Complaint With The FTC: You can file a formal identity theft complaint with the Federal Trade Commission through its online complaint form. Once you have submitted your complaint, the FTC will generate an Identity Theft Affidavit. It is very important that you save and print this document, as it can only be viewed once through the online system.
The FTC Identity Theft Affidavit is a critical supporting document for investigations into suspected identity theft.
- File A Report With Your Local Police Department: Bring a copy of your FTC Identity Theft Affidavit to your local police department, along with a government-issued ID, proof of your address (e.g., a mortgage or utility bill) and any additional documentation you have concerning the unauthorized inquiry. This will enable you to file an official police report, which, together with your FTC affidavit, will comprise your “Identity Theft Report.”
People often are hesitant to report a seemingly minor sign of identity theft to the police, but it’s important to remember that taking this step — which may be as simple as filling out and submitting a form at the station — is more of a procedural milestone than the beginning of an active investigation by law enforcement.
“That’s when people start taking you seriously,” said credit expert John Ulzheimer, who has worked with both Equifax and FICO. “If you are willing to lie to a police officer and file a false police report, that’s a criminal act. So that seems to be one of the dividing lines between people who are truly a victim and people who are just pretending to be victims just to get stuff removed from their credit reports.”
- Send A Certified Letter To The Creditor: If the creditor in question is not helpful when you first contact them for information, draft a letter formally requesting that the account be closed, or at least frozen pending investigation, and that all related notations be removed from your credit reports. Also ask for written proof of the authorization given to open the account as well as a written statement acknowledging that you are not liable for any debts incurred in relation to the account.
You can customize this sample letter from the FTC with your specific case details. Print it and send it to the creditor, along with a copy of your FTC affidavit and police report (i.e. your Identity Theft Report), via certified mail with “return receipt requested.” The creditor must provide a written summary of its investigation as well as any resulting actions taken (e.g., the closure of the account) within 30 days of receiving your letter. In the interest of covering all your bases, you may also want to send copies to TransUnion, Experian and Equifax.
Hopefully, this process will result in the removal of any inaccurate delinquency notations on your credit reports and enable you to handle any related identity theft. Keep in mind, however, that you may also need to get in touch with organizations such as the U.S. Postal Service, the Social Security Administration, the Internal Revenue Service or your state’s department of motor vehicles in order to clean up collateral damage and prevent future fraud.
Furthermore, there are a few additional identity theft prevention steps that you may want to take, just to be safe, given that an unauthorized, unpaid balance might not represent the extent of the fraud that an identity thief will attempt to perpetrate using your personal information.