Borrowers with problem credit currently in an auto loan should know that according to an Experian study they face a greater chance of having their identity theft stolen as their credit improves
Here at Auto Credit Express for the past two decades we've been helping car buyers with less than perfect credit looking for online car loans find the car dealers that can offer them their best chances for car loan approvals.
And while we've always suspected it, a report published by Experian over four years ago validates the relationship between credit scores and the chance of credit fraud – something that borrowers with poor credit should also be aware of.
It also touches on another issue we've questioned: if a good credit score offers more and better opportunities for them while a poor one doesn't, how do these credit thieves tell the difference? As it turns out, they probably don't.
Experian looks at identity fraud
The report released by Experian back in 2009 analyzed the rate of identity fraud across various credit score ranges. It also establishes a clear correlation between excellent credit scores (for both individuals and businesses) and "the propensity for identity fraud victimization."
Working the percentages
Using a VantageScore credit score of 769 as a reference point for the average score here in the U.S., the study found that those consumers in the lowest 20% (501-556 VantageScore) of the credit scoring population have anywhere from a 1% - 2% chance of identity fraud detection. This compares to consumers at the opposite end – the highest 20% - that have between an 8% - 16% chance of identity fraud detection.
So while consumers with better scores are targeted more than those with poorer scores, the question is how are identity thieves able to tell the difference between them? Experian believes they may not be able to.
According to the report, "although there may be fraud attempted against those with lower credit scores, it is less likely that those attempts will come to fruition. In essence, those with lower credit scores may be relatively safe from identity fraud simply because their scores are likely to be a barrier to entry in opening a credit-based account such as a credit card or a loan."
Preventing identity theft
Experian also offered these tips that can help prevent identity fraud:
• Consumers at all credit levels – but particularly those at the top – need to actively protect themselves from becoming victims of identity fraud.
• Consumers need to be aware that they are the first line of defense in preventing their information from being pirated in the first place.
• Consumers should not give out personal information over the phone unless they have initiated the call.
• Consumers should take precautions such as shredding financial documents and other documents containing sensitive information.
• Consumers should regularly check their credit reports at the three reporting companies. This could include enrolling in a credit monitoring program that will detect the crime quickly so that immediate action can be taken to mitigate the damage.
As we see it
Although people with below average credit scores are at risk of having their identity stolen, borrowers in the process of repairing their credit (including those with a subprime auto loan) should check their credit reports regularly.
Another tip: car buyers with bad credit or those that have been turned down for a traditional auto loan should know that at Auto Credit Express we match people that have experienced difficulties with their auto credit with new car dealers that can offer them their best opportunities for approved car loans.
So if you're ready to reestablish your car credit, you can begin now by filling out our online car loan application.