Give Up the Ghost: How to Spot Phantom Accounts
In an ideal world, you would be the only one opening a bank or credit card account in your name. In reality, however, that’s not always the case. Fortunately, there are tools available to help consumers get a better picture of the financial activity attached to their identities.
The Fair Credit Reporting Act (FCRA) passed in 1970, among other things, guarantees you the right to know what is in your file with consumer reporting agencies. And in 2005, consumers were granted the right to one free disclosure every 12 months from each national credit bureau and consumer reporting agency to help you ensure the accuracy of your information.
It’s a good idea for all consumers to take advantage of this free information every year. It’s better to catch a mistake early, than to find out about a problem when you are at a car dealership or at a bank looking to take out a loan.
For credit reports, you can go to AnnualCreditReport.com, the only authorized website to provide free credit reports, to access your credit report with each of the three major U.S. credit bureaus — Equifax, TransUnion and Experian. You can get your reports all at once, or if you prefer, you can visit the website every few months and access one report at a time.
Each report will provide an overview of your credit history, including current accounts in four categories — mortgage, installment (such as student loans or a car loan), revolving and other, and how you pay your bills on each account. It will also include any inquiries made into your credit, a summary of any negative information on file, personal information, such as your birthday and your current and past addresses, and a summary of any dispute file information.
It’s important to comb through all the information to look for errors. Even something seemingly innocuous, such as a wrong address, could be a sign of fraud. If you notice anything wrong, you should contact both the credit reporting agency and, in the case of an account you don’t recognize, the company where the suspicious account was opened to correct the error.
If someone "opens a card in your name, it's very likely going to end up on all three of your credit reports," said credit expert and FCRA consultant John Ulzheimer, formerly of FICO and Equifax.
When a bank launches a credit inquiry during the card application process, Ulzheimer added, that inquiry would show up on at least one of the credit reports.
If you suspect identity theft, you can report it to the Federal Trade Commission and get a recovery plan to help get your financial house back in order. If you’ve already requested all three of your free annual report within the last 12 months and find that you’ve been denied new credit, a new checking or savings account, insurance, or find that you’ve been turned down for a job because of your credit, you may be eligible to receive another free report within 60 days of receiving notice of the action.
While your free annual credit reports are extensive, they don’t provide all the information you may need. It’s also a good idea to request your free annual report available from Chex Systems, Inc., a consumer reporting agency that also operates under the FCRA. Unlike Equifax, TransUnion and Experian, which focus on your outstanding credit, ChexSystems focuses on checking and savings accounts.
"In addition to getting your free credit card report each year, it makes sense to get free ChexSystems report each year to make sure your banking history is clean in addition to your credit history," said Ken Tumin, the founder and editor of DepositAccounts, a bank account comparison website.
ChexSystems, which collects information on bounced checks and involuntarily closed accounts, is primarily used by banks to help them decide whether or not to approve a consumer's bank account application.
But ChexSystems also offers consumers a free annual report which shows, for the preceding three years, all the ChexSystems inquiries launched by banks and other companies. The inquiries spurred by bank account applications fall under the category known as "inquiries initiated by consumer action" on the report.
If you spot an inquiry in this category from a bank with which you don't recall opening a new account, it could be the sign of identity theft or fraud. A ChexSystems report also lists check orders, so if you see a record of checks you didn't order, that could be a red flag, too.
While an important tool, ChexSystems reports might not paint a complete picture of new bank account activity linked to your name, Tumin warns. If a bank account is opened and the bank does not launch a ChexSystems inquiry, the information won't be available on your ChexSystems report.
"In that sense, it's not a perfect solution. If you don't see any (unfamiliar) banks listed in your ChexSystems report, that's not a guarantee that there are no phantom bank accounts under your name," Tumin said, "but it is a tool that can help you identify some of the accounts that you did not know about."
And together, these tools can help ensure you have a better picture of your financial identity.