February 26, 2026 · 7 mins read
Santosh Kumar
Financial fraud is everywhere in today’s digital world, and it spans all ages and income brackets. It doesn’t matter if it’s credit card fraud, identity theft, or unauthorised loans – fraud can wreak havoc on your finances. Most importantly, it hits your credit score and account history — which are hugely important in lending and financial credibility.
Credit bureaus hold the information regarding your credit history in India, and lenders have come to depend heavily on this record when evaluating your creditworthiness. However, if someone has used fraud to gain access to that information, that person's credit profile could be adversely affected, leaving behind a false trail and damaging their financial reputation. By understanding how fraud affects your report, you will be able to take necessary measures to minimize the long-term consequences of someone's fraudulent actions.
Your credit score is a three-digit indicator of your ability to pay back debts based on your history of borrowing and repaying. Generally, it ranges from 300 to 900, with the higher numbers indicating a positive credit history.
Lenders look at this score as an indicator of how likely someone will repay a loan given the level of insecurity associated with lending them money.
Credit history, by contrast, is an actual history of your financial behavior. It contains details on loans, credit cards, repayment history, credit enquiries and balances. Credit score and credit history go hand-in-hand, and any kind of blemish — even fraud — can derail them.
Also Read: How to Apply for a ₹2,000 FD Credit Card on ZET App: A Step-by-Step Guide?
There are a number of methods that can be used to engage in financial fraud and will appear on your credit report and transactional history. One such example of a serious act of fraud is the crime of identity theft, which occurs when a thief uses someone's stolen identity to create an unaccounted or unlicensed account with a creditor; this action places an undisclosed debt on the individual's credit report, which is then provided to the credit reporting agencies.
Another example of financial fraud is credit card fraud, which is when the hacker steals your credit card information and uses it to make purchases that are unauthorized. This may have an adverse effect on your credit utilization and payment history if those purchases are not paid for or are disputed over an extended period of time.
An additional form of fraud is when an individual takes out a loan using your personal information without your knowledge or consent; this will create a liability on your credit file, but you will not be responsible for it because you did not apply for the loan in your name.
Also Read: How a ₹2,000 FD Credit Card Helps Build Your CIBIL Score Fast
Fraudulent activity can also result in a precipitous drop in your credit score. This typically occurs if unauthorised transactions raise your balance or if fraudulent accounts display late payments and/or defaults.
As an example, if a fraudster makes jumbo purchases with your credit card, your credit utilisation ratio goes up. A high utilisation ratio is a sign of financial strain and can reduce your credit score.
Likewise, if unauthorised loan is taken out in your name and payments default, the defaults are attached to your credit history. Payment history is one of the most critical factors in credit score scoring, and derogatory marks can pull it down significantly.
Also Read: What Is GSTIN? Format, Structure, and Meaning Explained
Credit utilisation is the amount of available credit you’re using as a percentage. It’s a key component of your credit score. Scam charges may unexpectedly spike your credit usage, driving your utilisation ratio above healthy limits.
A high utilisation ratio can suggest to lenders that you’re credit dependent or in some sort of financial trouble. And even if you didn’t make the transactions, it initially registers them as your credit activity, dinging your score until it’s sorted out.
Also Read: Annual Fee vs Lifetime Free Cards
Payment history tracks if you pay your loans and credit cards bills timely. It’s one of the most important pieces of your credit report.
If fraud causes bills or instalments to go unpaid, then these defaults will be logged on your credit record. Even one missed payment can seriously hurt your score and stick around your report for years.
These criminals can potentially access multiple credit products under their stolen identity. Every loan or credit card application leads to a hard enquiry on your credit file.
Several unauthorized queries over a brief period tend to drag down your credit score and indicate greater credit risk.
Also Read: Types of GST Registration in India
Fraud not only dents your credit score, it also leaves a long-term mark on your account history. Adverse entries like defaults, accounts over 60 days late, or settled accounts also stay on reports for years.
And after you fix the fraud, credit records still need to be made right. In this phase you might have trouble getting loans, credit cards or good interest rates.
And once your personal information is out there, you’re likely to be targeted again and again. or fraudsters continue to use the stolen details for new account openings or transactions.
Also Read: How To Invest in Post Office FD?
And that credit bureaus accept disputes on inaccurate information. When fraud is established, the bureau looks into the matter and deletes fraudulent entries.
Fraudulent activities that are reported immediately will not affect your credit score due to the credit bureaus removing your fraudulent credit card transactions once verified through their investigation. The sooner you report any fraudulent activity, the more likely the credit bureaus will remove the entry from your credit report and restore your credit rating.
Your fraudulent item will remain on your credit report as long as you keep disputing and reporting the fraudulent item(s). Credit bureaus require time to verify that the fraudulent item(s) did not originate with your knowledge. By disputing/ reporting an account as fraudulent, it will be removed more quickly if you report it promptly.
Correcting your credit report can begin once you have reported any fraudulent activity. Removing the fraudulent activity from your credit report will improve your score.
Identifying possible fraudulent activity on your credit report can be achieved by reviewing your credit report regularly and identifying any suspicious account(s) or inquiries or any outstanding balances on your account(s) that may indicate an account may be fraudulent. Reporting and reviewing your credit report regularly will allow you to detect fraudulent activity faster and limit the amount of financial loss from fraud.
If you have been the victim of identity theft, it could impact your ability to qualify for a loan in the future, as the fraudulent record(s) would remain on your credit report. Removing these records through reporting to the credit bureau will restore your credit history, which may then provide you the opportunity for a loan in the future.
You should review your credit report no less than twice per year; doing so provides advance warning of possible fraudulent activity and assists you in keeping your credit history healthy.
The first thing to do is to contact the lender who created the loan/account and file a complaint with the credit bureau and/or service providing the credit report. Doing so quickly is important to APPARENTLY prevent any further misuse and/or correct your credit report.
Build and Maintain a 750+ Credit Score
