Have you applied for a loan only to learn that your credit report is marred by a delinquent debt — one that you have already paid or maybe don’t recognize? You may be a victim of debt parking.

In case you didn’t know, debt parking is when a collection agency secretly places an account on your credit report, hoping you’re pressured to pay because of a pending application. This tactic, known as “debt parking,” violates debt collection and credit reporting laws.

Just how bad is debt parking? The Federal Trade Commission took action against a debt collection agency that placed close to $100 million worth of fake or questionable accounts onto consumer credit reports and collected more than $24 million.

Although the tactic violates debt collection and credit reporting laws, consumers can be victimized by the practice of debt parking and the impact on their financial health can be devastating.

Unfortunately, consumers often don’t learn about it until a mortgage company, prospective employer or other decision-maker pulls their credit report and spots what appears to be an unpaid debt. With a house, car or job in the balance, many people feel pressured to pay up – even though they may not actually owe the money.

How can you protect yourself against debt parking?

Actively monitor your credit regularly.

An unexpected drop in your credit score may be the first indicator that a debt has been added to your credit report, especially if you’ve been making your monthly payments on time and you haven’t taken on any new debts, so be sure it’s being constantly monitored.

Be cautious with all debt collection accounts, even if the debt seems familiar. Dig deeper to verify the debt belongs to you, that the amount is correct, that it’s within the timeframe for legal collection and the collector has the right to collect on it.