The man with an identity crisis

It can be a shock if you are turned down for credit. But what happens if you discover the reason you have been rejected is because someone has stolen your identity, accumulated debts in your name and left you to clear up the mess?

Paul Turner, a solicitor from Northampton, realised he had been a victim of identity fraud after companies he had no connection with began asking him to pay money totalling almost £1,000.

In July this year he started receiving letters demanding payment for unpaid bills from his previous address. Two of the letters were threatening him with legal action if he failed to pay up.

All the bills had been accrued since Mr Turner's change of address. He told the companies he had moved and asked them to amend their records and remove the debts from his credit file.

Most accepted that someone else had fraudulently used Mr Turner's name and dropped their demands. However, two of the companies were less sympathetic, he says, resulting in four frustration-filled months (during which he sent almost 40 letters) pressing them for action.

One of the companies, British Gas, has since accepted Mr Turner's claim and offered £100 compensation for taking so long to sort out the problem. He is still in discussions with Next, which he says has yet to accept that a bill for £341 was fraudulently acquired. Next said it was unable to comment on individual cases. The debt will remain on Mr Turner's credit file until a resolution is found.

"Throughout July, I dreaded coming home from work because I just didn't know what to expect in the post," says Mr Turner. "I'm a solicitor, and initially I didn't expect it all to be so difficult to sort out."

Unfortunately, Mr Turner's is part of a wider problem. Incidences of identity theft have increased significantly in recent years - there were 12,000 last year, according to CIFAS, the fraud prevention body. But even more worrying is how easy it is for the fraudsters.

All an identity thief needs is to find an individual they can target - perhaps by moving into a property after that person has left, register under that person's name on the electoral roll and make credit applications. Even if the actual person is registered at a new address in another constituency, their name may well be duplicated without anyone noticing.

Peter Brookner, of Experian, one of the UK's two credit referencing agencies, says: "If you've got a mind for it, it's not that difficult to steal someone's identity. Anyone could put your name on the electoral register. This is not checked and with rolling registration this type of thing becomes even harder to track."

The Electoral Commission says: "There is no central database. It is up to each local authority to keep records. A person could be registered in a number of places and it wouldn't be seen as suspicious."

Experian advises people to check their credit file at least twice a year. Mr Brookner says: "The modus operandi of these people is to get hold of a person's old post and use it to accumulate information. So if you make sure you forward mail via the post office when you move, potential fraudsters will be deprived of otherwise easy opportunities."

He says thieves have been known to search dumps to find old credit card bills and suggests financial documents are kept in a safe place or destroyed if no longer needed.

"If you think you're are a victim, tell the police immediately because the sooner the trail is taken up the better the chance of tracing the perpetrator."

The proportion of fraud caused by identity theft is relatively small, but Experian believes its growth is evidence that fraudsters have found they can commit fraud without much chance of being caught.

Some things are being done to deal with the issue, however. Credit reference agencies for example, are introducing new software to help trace false personal details and CIFAS says it intercepts a significant amount of attempted fraud.

The Electoral Commission says moves are being made to compile a central database but admits it is impossible to ensure the roll is accurate, or to track multiple registrations.

The jury is still out on whether national identity cards would solve the problem and, even though the overall risk is relatively low, people would be wise to keep their financial documents safe. The alternative could cost you dearly.

What to do if it happens to you

· Check your credit reference files. Send a £2 fee to Experian Ltd, Consumer Help service, PO Box 8000, Nottingham, NG1 5GX, or Equifax Plc, Credit File Advice Service, PO Box 3001, Glasgow, G81 2DT.

· Inform lenders and the credit reference agencies of any discrepancies and report the fraud to the police.

· Remove your name from surplus electoral rolls.

· Have at hand any documents that will help prove you were not the perpetrator.

· If you are unhappy with the responses from lenders or credit reference agencies, you can complain to: The Office of Information Commissioner, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AS.