Identity Fraud and Credit: How to Protect Your UK Credit File

Identity fraud occurs when a criminal uses another person's personal details — such as name, date of birth, and address — to obtain credit, services, or goods in that person's name. In the UK, the impact of identity fraud is often visible on the victim's credit file before the victim is even aware a crime has taken place. Unrecognised searches, new accounts, and sudden drops in credit score are common early warning signs.

This guide explains how identity fraud impacts credit files, the specific mechanisms available in the UK to protect against it (including CIFAS Protective Registration), and the steps required to restore a credit file after an attack.

• Impact: Fraudsters can open bank accounts, take out loans, and run up debts in your name. These appear on your credit file, damaging your score and eligibility.
• Prevention: CIFAS Protective Registration (£30 for 2 years) adds a flag to your file telling lenders to conduct extra identity checks.
• Detection: Monitor your credit file regularly. Look for unrecognised hard searches and new accounts.
• Resolution: You are not liable for debts created by fraud. You have a statutory right to have fraudulent data removed from your file, but you must report it to the lender and Action Fraud first.

When a fraudster applies for credit in your name, the lender conducts a credit search. This leaves a hard search footprint on your credit file. If the application is successful, a new credit account appears on your file. If the fraudster then fails to make payments (which is almost certain), the account will record missed payments and eventually a default.

Because UK credit reference agencies (Experian, Equifax, TransUnion) operate independently, fraud may appear on one file but not another, depending on which agency the lender checked. Therefore, monitoring all three is essential.

CIFAS: The First Line of Defence

CIFAS is the UK's fraud prevention service. It operates the National Fraud Database.

• Victim of Impersonation Marker: If you are a victim, a lender can place this marker on your file. It warns other lenders that your identity has been compromised. It protects you and does not damage your credit rating.
• Protective Registration: A proactive service you can pay for. It places a warning flag on your file for two years, instructing lenders to verify your identity rigorously before approving credit.

Liability

Under the Lending Standards Board's Contingent Reimbursement Model (CRM) and general consumer credit law, you are generally not liable for debts incurred through identity fraud, provided you have not been grossly negligent and have reported the issue. The lender must write off the fraudulent debt and correct your credit file.

Restoration Time

Restoring a credit file is not instant.

1. Report to Lender: The lender investigates. This typically takes up to 8 weeks.
2. Report to Action Fraud: Obtain a crime reference number.
3. Data Correction: Once fraud is confirmed, the lender instructs the CRAs to remove the data. CRAs typically process these updates within 28 days of receiving the instruction.

The "Notice of Correction" Option

While the investigation is ongoing, you can add a Notice of Correction to your credit file (free of charge) stating: "My identity has been compromised. Please do not advance credit without verifying my identity with me directly." This acts as a temporary roadblock to further fraud.

"The credit agency let this happen."

Credit reference agencies hold data; they do not approve loans. The lender is responsible for verifying identity. The CRA simply recorded the data the lender sent them.

"I need to pay a company to fix this."

You do not. You can resolve identity fraud yourself for free by contacting the lenders involved and the credit reference agencies. "Credit repair" companies charge fees for doing exactly the same thing.

"Changing my address will stop it."

It will not. Your credit file is linked to you (via name and date of birth) and your address history. Fraudsters often use your previous addresses to apply for credit.

Familial Fraud

A significant portion of identity fraud is committed by family members or ex-partners. Lenders treat this the same as stranger fraud, but the police (Action Fraud) reference number is often strictly required before lenders will write off the debt, as they need proof you are treating it as a crime.

Post-Breach Vulnerability

Please note that after a data breach (where your details are leaked online), you are at elevated risk for years, not just weeks. Protective Registration is strongly recommended in these cases.

If you discover identity fraud on your credit file:

1. Contact the Lender immediately: Tell their fraud department. They will freeze the account.
2. Get a Crime Reference Number: Report it to Action Fraud (online or by phone).
3. Check all three files: Do not assume it is isolated to one report.
4. Consider Protective Registration: For £30, it creates a significant hurdle for fraudsters attempting to use your details again.
5. Be patient but persistent: It can take months for the file to be fully cleaned. Keep records of all calls and emails.

• Vigilance: Regular credit monitoring is the best early warning system.
• Action: Report fraud to the lender and Action Fraud immediately.
• Protection: CIFAS Protective Registration is a powerful, low-cost tool for preventing recurrence.
• Liability: You are not responsible for fraudulent debts, but you must engage with the process to get them removed.
• Patience: Cleaning a file takes time, but it is your statutory right to have accurate data.