Identity theft can significantly affect your credit history, as a lot of these scammers can apply for credit accounts and accumulate large amounts of debt in your name. This could damage your credit rating, resulting in higher rates of interest and making it harder to get approved for brand new credit lines.
Luckily, there are steps you’ll be able to take to stop identity thieves and get your credit history back in shape.
Impact of identity theft in your credit
When identity thieves steal your personal information, they typically use it to open bank cards, take out loans or apply for utility services (like water, gas or web) in your name. They will then leave these accounts unpaid for months, resulting in late payments and significant amounts of debt being reported in your credit report.
The 2 most vital aspects influencing your credit rating are your payment history and the quantity of debt you owe. As missed payments and high outstanding balances from fraudulent accounts start to indicate up in your credit history, your rating might drop around 100 points or more.
You’ll then have a tough time qualifying for bank cards, personal loans, mortgages and other financial products. You may also pay higher rates of interest and have lower credit limits once you do get approved.
How one can repair your credit after identity theft
Repairing your credit after identity theft typically involves disputing misinformation with credit bureaus and dealing with creditors to shut any fraudulent accounts. But there are additional steps you must take to safeguard your creditworthiness.
Here’s what you must do:
1. File a report with the FTC and native police
Start by reporting the fraud to the Federal Trade Commission (FTC) through IdentityTheft.gov. This may generate an official report you should use to notify your creditors and ask them to shut fraudulent accounts or refund unauthorized transactions.
Based on the knowledge you provide, the FTC can even create a customized identity recovery plan with steps you must take to stop fraudsters of their tracks and fix your credit. You possibly can either print your plan or arrange an account on the FTC’s website where you’ll be able to track your progress. You’ll also get access to pre-filled letters and forms you’ll be able to send to credit bureaus, creditors and debt collectors.
2. Check your credit report for fraudulent accounts
If someone has used your information to take out bank cards or loans, these fraudulent accounts will show up in your credit reports. These accounts will damage your credit rating because the fraudster racks up debt and doesn’t pay it.
To avoid this, check your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion) for accounts you do not recognize. You possibly can get free copies of your reports through AnnualCreditReport.com.
In case you find any fraudulent accounts in your reports, contact the bureau that’s reporting the account and ask them to remove it. You possibly can file a dispute online, by phone or by mail.
3. Contact your creditors to report suspicious accounts
Besides filing a dispute with the credit reporting agencies, you must also report the account to the creditor who opened the fraudulent account.
You will discover the creditor’s name in your credit report, together with the date the account was opened, sort of account and other information you’ll be able to mention when reporting the account. Note that the creditor might ask for a replica of your FTC identity theft report and a police report to substantiate you are a victim of identity theft.
4. Place a fraud alert in your credit reports
Fraud alerts let creditors know your personal information has been exposed to a fraudster, in order that they should take extra steps to confirm your identity before opening any recent accounts in your name.
There are two sorts of fraud alerts: initial and prolonged. Initial fraud alerts can be found to anyone and last one 12 months. Nonetheless, in case your identity has been stolen and also you filed a report with the FTC, you’ll be able to go for an prolonged fraud alert. These last seven years, and additionally they stop corporations from sending you pre-screened bank card and insurance offers for five years.
You possibly can place a fraud alert by calling the credit bureaus or through their website. You don’t must notify all three bureaus — the primary one you contact will inform the opposite two.
5. Freeze your credit reports
A credit freeze goes a step farther than fraud alerts and blocks access to your credit report.
If you freeze your report, lenders cannot see your credit history, in order that they won’t open recent accounts in your name. This effectively stops fraudsters from applying for credit using your personal information.
To freeze all three of your credit reports, you’ll need to call each bureau individually. It’s also possible to place a credit freeze online for those who create an account with the bureaus. The freeze will stay in place until you lift (or thaw) it.
Should I hire a credit repair company?
Credit repair corporations help individuals improve their credit scores by reviewing their credit reports for inaccuracies or outdated information that’s impacting their creditworthiness. They then work in your behalf to dispute these errors with the credit bureaus and creditors.
Hiring a credit repair company could be helpful in case your credit report has multiple fraudulent accounts and also you’re unsure find out how to dispute them yourself — or have little time to.
Still, bear in mind that many credit repair corporations charge significant setup and monthly fees, sometimes exceeding $100. This generally is a steep price to pay, especially since you’ll be able to repair your credit yourself free of charge. Also, be careful for credit repair scams; avoid corporations that promise to delete all negative items out of your credit report, even those which might be correct.
How Credit Repair Can Help After ID Theft FAQs
How long does it take to repair your credit after identity theft?
The time it takes depends upon how the fraudster used your personal information. If the identity thief opened several credit accounts with different creditors, it could take several weeks and even months to repair your credit history because you would want to contact and supply documentation to every creditor individually.
How can I prevent identity theft?
There is no sure-fire option to prevent identity theft, but several methods can reduce your risk. For instance, usually monitor your credit reports for accounts you do not recognize, use strong and unique passwords on your online accounts and enable two-factor authentication. Shredding sensitive documents before throwing them out can even help protect your identity.
Is identity theft protection value it?
Identity theft protection services could be value it for those who’d like constant monitoring of your credit report and private information. These services send you immediate alerts after they detect suspicious activity which may signal someone is using your data fraudulently. Many also scan the dark web on your personal information and let you understand if there’s a breach involving your data. Some offer identity restoration services, helping you’re employed with credit bureaus, creditors and law enforcement to correct fraudulent information.