VICTIMS of identity fraud have been warned that they may find it difficult to take out a loan or a mortgage in future because banks are failing to clear their credit files of all wrongdoing.

Banks which refund victims of ID fraud are not legally obliged to issue a “notice of correction” to credit-reference agencies such as Experian. In some cases, it is left to the victim to correct their score themselves.

Experian said it was contacted by 2,570 identity fraud victims in the first half of this year – a 68% year-on-year increase.

Though 45% of victims were alerted to the fraud by a lender, for the first time more than half of cases were self-diagnosed by consumers checking or monitoring their own credit reports.

Even after a record is “cleared”, there are sometimes residual details that could result in credit being declined.

About 80% of loans and a quarter of credit cards now offer different interest rates depending on your credit record, according to analysts Moneyfacts.

Research by the consumer group Which? found that one in five people who check their credit records find errors that could affect their ability to obtain credit.

One reader, Howard Goodman, 56, from north London, had his identity cloned by a fraudster applying for a Halifax account. After being sent an introductory letter by the bank, he replied denying all knowledge of the application. Halifax agreed to delete the fraudulent details from his credit record.

Goodman joined Experian to look at his credit record. Though most of the details had been removed, he was still linked with a fraudulent forwarding address that Experian cleared for him.

Experian said: “This should not have been the case. It could have affected him if he wanted to obtain credit.”

In some cases there could be multiple lenders involved, it said, so even if one agreed to remove details, details of other fraud could still be on record.

Halifax said its standard procedure is to remove all references to fraudulent activities. But it admits that on some occasions this does not happen. “We aim to do our best, but there may be instances when things relating to the fraud are overlooked,” it said.

Danny Harrison of the security firm CPP agrees it is good practice to check and notify credit reference agencies if you have been a fraud victim. “Though many lenders will correct credit records, there is no guarantee this has been done unless you do it yourself,” he said.

If you have been denied credit, your lender should tell you whether your credit record was a relevant factor. It is worth finding out why your loan application has been turned down, rather than making repeated applications, as multiple attempts to get credit can damage your rating further – you could end up paying more interest.

You can apply direct to any of the credit-reference agencies – Experian, Equifax and Callcredit – or you can go through a web-site like Checkmyfile.com, which allows you to trawl through your reports from all three for £16.95.

Experian, Equifax and Callcredit charge £2 for a copy of a file and it is a good idea to check each one as different lenders use different agencies and they don’t all hold the same information.

If you spot an error, write to the credit-reference agency to ask it to remove or change the entry, explaining why it is wrong and sending any evidence. The agency has 28 days to act, and the entry is marked as “disputed” in the meantime, so any lender searching your file will know not to rely on that information.

If the agency doesn’t amend your records, you have a legal right to send a “notice of correction” (up to 200 words), to be added to your file. Explain what you think is wrong, including mitigating circumstances.

Many lenders recommend registering with Cifas, the UK fraud-prevention service. By doing so, lenders will seek extra information to make sure you are who you say. It costs £11.75 a year.

If you are a victim of ID fraud, and the institutions involved are members of Cifas, your details are automatically registered. Cifas registers over 90% of lenders, including high-street banks.

Cifas said the information does not determine your credit score and you will not be denied money based on a Cifas entry. But the additional checks mean you will not be able to obtain “quick” quotes online.

Lorna Brooks, 55, from Aber-deen, banks with NatWest. She had her ID stolen last November. Though the bank cleared her credit records, her Cifas entry meant she was turned down when she tried to sign up for a new mobile phone.

She had problems opening an Instant Saver account with the Post Office. “It’s good that we are on the Cifas register but it was humiliating to be turned down in the mobile phone shop,” she said. “It takes longer to get credit clearance because of the checks.”

HOW TO PREVENT TROUBLE

- Register with a credit reference agency such as Callcredit, Equifax or Experian.

- Invest in a shredder and destroy all documents.

- Contact Cifas Protective Registration if you want an added layer of protection.

- Use a firewall and antispamming software on your PC such as Norton Systemworks, especially if you bank online.

- When changing address, inform all financial institutions you are registered with. Howard Goodman, here with wife Nicky, had to have fraudulent details removed from his credit record