Over 13 million consumers were victims of fraud last year. Unfortunately, this number will rise unless consumers take precautions to protect their identities. Credit card companies, with the use of advanced technology, have come up with new credit cards (also known as EMV chip cards) to reduce fraud risk. But this is not enough.
Consumers can do more to protect personal account details from criminals by using common sense. To keep your money where it should be, here are the popular loan mistakes that you should take care to avoid.
#1 Failing to check account activity
Take a few moments to review activity associated with your banking accounts. Many banks make it easy for you to access account details online or through a mobile app.
You can learn about any f that threatens to burn a hole in your account. Contact your financial institution immediately when you see a transaction you didn’t make.
#2 Using a weak or common password
The best solution is to use a different username and password for financial accounts. For example, if you use other online accounts such as Google, Twitter, or eBay, refrain from using these passwords and usernames. Having the same info for all accounts makes it easier for cyber criminals to access your accounts even if they only hit one website.
Change passwords for financial accounts regularly. Keep passwords in a safe place where no one can access them. Use password combinations less likely to be broken by a hacker such as using a mix of upper and lowercase letters, numbers and symbols. Something like “123456” is asking for trouble.
#3 Making hacking easier via cell phone use
Consumers use their cell phones for everything from talking to texting to shopping. Whether you have an Android or iPhone, such devices make it easy for people to access banking account information when doing tasks such as paying bills or ordering merchandise.
Millions of consumers use mobile banking features on their devices. According to a study by the Federal Reserve, this is roughly 1 out of every 2 users of smartphones. Research director and fraud security head Al Pascual at Javelin Strategy & Research says consumers should be cautious when accessing financial information from any device such as a laptop or tablet, not just your smartphone.
Pascual suggests that consumers check to make sure they utilize a secure connection when going online. Use banking apps recommended by your bank available through Google Play or iTunes. Go to your bank’s website to learn what mobile options they have available to ensure a safe connection.
Your internet browser should have a secure connection starting with “https://” that lets visitors know the site has added security measures to protect sensitive information. Avoid using public Wi-Fi connections since cyber criminals find them easier to break into.
#4 Not taking advantage of security notifications
Use notification security features offered by your bank. Many are free to sign up for. They let you know when account activity occurs and saves you havoc of logging in to keep checking your account balance. You can learn much sooner about the activity you didn’t authorize.
#5 Thinking online banking is risky
Online banking offers a great level of convenience, even though it has risks. Various credit unions and banks invest millions keeping their websites safe.
Large banks have higher risks since cyber criminals are trying to infiltrate their systems more often. Yet, it helps to look at this from another perspective. Big banks have more to invest in better quality security measures such as firewalls, website encryption, and so on.
As long as consumers use caution when accessing financial data online, you don’t have to miss out on the convenience of the service and you will be comfortable taking advantage of it.
#6 Carrying a lot of debt
Your debt-to-income ratio may catch the attention of creditors or lenders even if you pay your bills on time.
Financial experts say it is okay to have some debt when applying for a loan, but if you have a high amount against how much you earn, it may make it harder for you to get approved. Wait to make any large purchases to keep your debt in check.
#7 Not reviewing your credit report
Financial experts suggest consumers get a copy of their credit report before applying for a loan.
Check details carefully for any errors and learn how activity regarding your finances has been reported. Credit reports are generated by three agencies including Equifax, Experian, and Transunion.
You can review this information for free once a year. Contact the credit bureau when a mistake is found. If you have bad credit work on paying down accounts, seek forgiveness from creditors, pay on time, and keep old accounts open in good standing.
#8 Putting false information on the credit application
Consumers who don’t tell the truth about their income lenders may see this as borrower fraud. You could experience federal charges if proven and be liable for paying the loan amount. Being honest about your finances is the best way to avoid mortgage fraud.
Keep in mind, borrowers can also suffer if they are a victim of a bad loan. The loan officer may say it is okay to change your numbers, force you into a larger loan, or fail to recognize your monthly income. Make sure forms are complete and the information is disclosed to you in full by the bank.
#9 Ignore creditors or lenders
Consumers may find it easy to ignore lenders when falling behind on payments. Lenders may send correspondence details by mail, email, or attempt to contact borrowers by phone. There are options available to help you get caught up on payments, but you won’t be able to take advantage of them if you keep ignoring their calls.
If you are going through hard times, discuss the matter with them. You may be surprised to learn what they can do to help you get your account in good standing.
#10 Lacking stability
When lenders decide to give credit, one aspect they look at is stability. This means, if you are looking to make a big change such as switching jobs, you may want to think twice before doing so.
#11 Being unsure about your finances
Getting a loan can have serious consequences if you are not sure you can repay it. In some cases, you may end up paying more than you can handle when factoring interest rates and late fees.
Over time, the amount you owe will swell past the amount you borrowed. In short, review loan details carefully and be sure you can pay it back based on your current ability to make payments.
#12 Using a loan to pay back another
Taking out a loan to pay another loan off often doesn’t work out. Financial experts suggest consumers avoid this action at all costs. A common example is to use a payday loan to pay off a loan you previously got from another lender.
Consumers fall into this trap and find it difficult to get out! The interest on the loans alone is highway robbery. Unfortunately, some borrowers end up becoming bankrupt. In short, don’t rob Peter to pay Paul.
#13 Failing to do your homework
Before taking out a loan, research it first. Learn about laws, rules, and regulations related to the loan. Research the lender and learn how interest rates are calculated. When using a payday loan be cautious and make sure you can pay it back without the need to take it out again.
Learn your lending options and don’t apply to the first one you come across. When you need short-term cash, explore other options such as borrowing from friends, family, pawning valuables, title loans, or selling something of value you don’t use anymore.