NEW YORK (MainStreet) — While car and home buyers underestimate the impact of identity fraud on securing a good interest rate, demand is growing for U.S. retailers, banks and credit card companies to accelerate the introduction of chip-and-pin technology to combat cyber security risks.

Only 73% recognize that identity fraud could affect their ability to get loans with favorable interest rates, according to a new survey.

"When identity theft and fraud go undetected, a credit score can plummet while criminals use the victim's identity for their own financial gain," said Ken Chaplin, senior vice president of marketing with Experian Consumer Services. "If consumers do not check their credit before applying for a loan, they likely have no idea that their credit scores have been adversely affected by identity fraud."

An Experian Consumer Services study found that more than half of those acquiring big-ticket items failed to check their credit at any point in the buying process, which can lead to surprises when it comes to closing the deal.

"Consumers might think that because they pay their bills on time they don't need to check their credit scores or reports," Chaplin told MainStreet. "However, there are many factors that affect credit and knowing one's credit status in advance can help to negotiate favorable interest rates."

Some 60% of home buyers and 25% of car buyers check their credit as part of the purchase process. For those that check their credit, 13% said they were surprised by their credit scores with 36% saying their credit scores were higher than expected.

"It's especially important that consumers check their credit regularly to spot signs of fraud, understand better what affects their credit and make decisions that will help them be in the best position possible when it comes time to buy their dream home or car," said Chaplin.

Signs of fraud on a credit report can include but are not limited to accounts that don't belong to the consumer, inquiries the consumer did not authorize and addresses where the consumer has not lived.

"Identity thieves use consumers' information for many purposes, including obtaining fraudulent loans, credit card accounts and filing false tax returns," Chaplin said. Because credit card companies often bear the brunt of credit card fraud, they are lobbying U.S. retailers and banks to accelerate the introduction of chip-and-pin technology to combat cyber security risks.

"The chip employs cryptography and other levels of security that are not present on a magnetic stripe which in comparison is relatively insecure," said Stephen E. Stein, attorney and partner with Thompson & Knight in Dallas. "The chip, which is embedded in the card, is a small computer with built in security features."

More than 1.6 billion chip and pin cards are already being used worldwide but U.S. retailers are slow to adapt the technology partly due to the cost of new cards and cash register terminals that are enabled to read the chip.

"Chip and pin cards cost about five to ten times more than the magnetic strip cards and the typical replacement cycle for a point of sale terminal is five or more years," Stein told MainStreet.

But newly proposed legislation as well as the threat of pricey class-action litigation may cause lagging stores to adopt the new cards more quickly.

"Certain members of payment networks, such as Europay, Mastercard and Visa, plan to effect in October a liability shift so that retailers that accept chip and pin cards for payment without having a compliant device will assume greater liability for fraudulent transactions," Stein said.

--Written by Juliette Fairley for MainStreet