Taking a loan nowadays has become easy due to the increase in digitization. Applying for the loan, processing it, and disbursing it can be done completely online. While this is quick and easy, it has given rise to loan fraud. According to media reports, Of late, people are worried about finding new loan accounts on their credit report, through which they have never borrowed money. PAN details of many people are being used by several scammers to procure loans from third parties. Cases of debit or credit card fraud have also seen an increase. This happens when an unauthorized person uses your credit or debit card to make purchases. Loan fraud and credit card fraud can potentially hurt your credit score

What Is A Loan Fraud?

Loan fraud is a scam wherein a criminal uses your identity to obtain a loan illegally. Additionally, if someone has a line of credit and a scammer draws funds from that line, that also falls under loan fraud. Fraudsters open new loans and often escape without paying anything leaving you with huge and unpaid debts. This will hurt your credit score drastically. 

Warning Signs Indicating That You Are Dealing With A Loan Fraud 

Here are some signs denoting loan fraud 

  • Calls, WhatsApp communications, and SMS asking for confidential information like passwords, ATM PIN, OTP, new banking details, etc. A bank, fintech, or NBFC will never ask for such sensitive information. Scammers will not be concerned about your credit history, and they will pressurize you to apply for loans before a certain deadline. They would not be able to give you comprehensive details about the loan charges or the application process. 
  • Beware of phishing scams. When you receive emails from email addresses and domain names with altered spellings, It may be a spoof. If the message contains too many typos, if it asks for confidential information, if it uses authority or urgency, or if it asks to make cash transactions, then it is phishy.
  • You will be asked to download malware that gives them access to your device. 
  • Rather than knowing your credit history or score, the scammer will be intent on getting personal information such as Aadhar or Pan card numbers and bank account numbers. 
  • They might demand advance payments for loan processing or GST. But, these fees are charged once your loan gets approved.  
  • They will not share their organization details like address, phone number, email etc. They will hide their identity. 

How To Safeguard Yourself From Loan Frauds?

Monitor Your Credit Score and Credit Report Regularly:

Tracking your credit score is the easiest way to check if any loan accounts have been opened in your name. The accounts information section of the report shows all the information regarding your credit. If there is an account that you cannot identify, then it is a case of identity theft. Sign up for Credit Mantri’s Credit Health report to get regular updates.

Ensure That The Website You Use Is Secured:

Make sure that the website you visit is safe and secure. If the website is prefixed by HTTPS: rather than just HTTP://, it is secure and trustworthy.  

Use A Secured Internet Connection:

Make sure that you use a secured internet connection whenever you submit sensitive personal or financial information. 

Use Only Verified Apps:

Apps provide easy and simple access to a variety of loan services. So, they are used widely. But, not all apps are trustworthy, and there are many unverified apps online.  You should use only verified loan apps, otherwise, you may be the next target for loan fraud.

Do Not Reveal Confidential Information Over SMS, Emails, or Calls:

Do not disclose confidential information.  Also, protect yourself from emails that come with downloadable attachments. Hover but do not click on attachments until you verify the sender. If emails redirect you to a third-party website, be sure that it is a trusted one. 

What Is Credit Card Fraud?

Debit and credit card fraud is the most widespread type of identity theft. This fraud occurs when criminals use the card without your permission. Scammers gain information about your credit card number, PIN, and security code to perform unauthorized transactions. Misuse of your credit card causes your credit card balances to soar. It could push you into steep debt potentially hurting your credit score.     

Ways In Which Credit Card Fraud Occurs And Precautionary Measures


Small skimming devices are attached to point of sale devices to hack your data. These tools store the card information when you complete a swipe. Skimming devices are also attached to ATM card slots to clone card information while cameras can be placed on your keypad to capture your PIN. 

Precautionary Measures:

  • Be on the lookout for suspicious devices connected to PoS units. 
  • Always shake ATM slots to see if a device comes out. 
  • Cover the keypad with your other hand when you enter the pin. 

Dumpster Diving:

This low-tech method involves card thieves digging through garbage bags and dumpsters. They are looking for private information that will give them access to your debit or credit card. This information can be found on bills, old cards, or documents with their full card number on them.

What To Do: 

  • Shred documents and bills before you discard them. You can put them in different trash cans so that the thieves have no probability of putting the pieces together. 
  • Cut old debit or credit cards before dumping them. 


Scammers can hack companies with which you have had credit card transactions or those firms that carry out credit card processing activities. They use several tools to steal data. 

What To Do:

  • Make sure that websites do not store your card number.
  • Review your credit card bill regularly.


Your credit card information can be acquired by phishing. You will be duped into revealing confidential data related to credit cards through an email, message, or website disguised as legitimate when it's actually not. 

What To Do: 

  • Beware of messages that may sound too good to be true, which it most likely is.
  • Do not divulge any personal confidential information like OTP, PAN, AAdhar, or bank account details to anyone and definitely not over email.
  • Verify the URL, and never click on suspicious links. 
  • Use the bank’s website for online transactions or contact your bank’s official helpline numbers directly.  

Theft or loss of card:

If your credit card gets stolen or misplaced, it may be misused. 

What To Do:

  • Block your card by calling the customer care number or using your mobile app. 
  • Ensure that you are covered under zero liability for fake transactions
  • Remove the card information from online shopping websites. Since scammers will have your card details, they will also have access to your online accounts. 
  • Get in touch with your lenders and request them to update your credit report. You can prevent fraud through this. 

Most Importantly Review Your Credit Reports 

It is vital to monitor your credit reports for unknown card transactions and new accounts. If someone opens a fraudulent account in your name, you should be the first to know especially if it hurts your credit score. 

Final Takeaway

Identity theft is an unfortunate occurrence, and it impacts millions of people all over the world. It is unlikely to disappear, but safeguarding personal data, monitoring your credit activity regularly, and reporting suspicious activity as soon as you notice it can help you avoid and tackle this crime. 

FAQS To Protect Yourself From Identity Theft in Loan Fraud and Credit Card Fraud

1: How can you safeguard yourself online?

  • Use strong passwords. 
  • Beware of encryption
  • Install security suites
  • Avoid phishing scams 
  • Protect your wireless router with a password
  • Conceal your personal information
  • Get private data protection
  • Allow cookies on your browser only when required
  • Protect your credit card information

2: What are the various ways to prevent credit card hacks?

The various ways to prevent credit card hacks are as follows:

  • Get a new card to replace your previous card.
  • Beware of phishing scams
  • Do not reveal personal information over calls, SMS, WhatsApp communication, and so on
  • Use a secure network connection
  • Shred documents and bills containing your credit card number before you trash them
  • Cut your old debit or credit cards before you dump them. 

3: What should I do if someone steals my identity and takes a loan in my name?

If you come to know that someone has taken a loan illegally in your name, then you should inform all the 3 credit bureaus. Dispute a charge through mail or the company website. 

4: How to learn if someone stole my identity?

  • Track and review your bills. If you stop getting a bill, it may be that someone else is using your account and has changed your billing address.
  • Review your credit score and credit report on a regular basis.
  • Check your bank statement.