Mechanical systems are often nonlinear with nonlinear components and nonlinear connections, and mechanical damage frequently causes changes in the nonlinear characteristics of mechanical systems, e.g. loosening of bolts increases Coulomb friction nonlinearity. Consequently, methods which characterize the nonlinear behavior of mechanical systems are wellsuited to detect such damage. This paper presents passive time and frequency domain methods that exploit the changes in the nonlinear behavior of a mechanical system to identify damage.In the time domain, fundamental mechanics models are used to generate restoring forces, which characterize the nonlinear nature of internal forces in system components under loading. The onset of nonlinear damage results in changes to the restoring forces, which can be used as indicators of damage. Analogously, in the frequency domain, transmissibility (output-only) versions of auto-regressive exogenous input (ARX) models are used to locate and characterize the degree to which faults change the nonlinear correlations present in the response data. First, it is shown that damage causes changes in the restoring force characteristics, which can be used to detect damage. Second, it is shown that damage also alters the nonlinear correlations in the data that can be used to locate and track the progress of damage. Both restoring forces and auto-regressive transmissibility methods utilize operational response data for damage identification. Mechanical faults in ground vehicle suspension systems, e.g. loosening of bolts, are identified using experimental data.