Overview of Identity Theft and Its Impact On Credit Scores

By: The Schlanger Law Group Legal Team 

Identity theft and credit score damaged

Overview of Identity Theft and Its Impact On Credit Scores

As technology continues to advance, it is becoming increasingly common for hackers and identity thieves to steal our personal information. One of the most serious effects of identity theft is the impact it has on our credit scores. It’s essential to understand how identity theft can damage your credit score and the steps you can take to safeguard your financial health.

Identity theft occurs when someone steals your personal information, such as your Social Security number, bank account information, or credit card numbers, and uses it to commit fraud or other crimes. This can lead to unauthorized charges, the opening of new accounts in your name, or even federal tax fraud. The consequences of identity theft can be far-reaching, as it can damage your credit score, making it difficult to secure loans, mortgages, or lines of credit in the future.

A good credit score is essential for securing loans, mortgages, & credit cards at a good interest rate. When identity theft occurs, it often leads to a big drop in your credit score due to fraudulent transactions and unfamiliar accounts. Fortunately, there are ways to fight back against identity theft and its effects on your credit score, warning signs to look for on your credit report, and ways to dispute errors, report identity theft, and protect yourself from future incidents. 

If you have been negatively affected by identity theft or credit report mistakes, we may be able to help, contact us at Schlanger Law Group for a private consultation.  We have helped countless clients recover from similar identity theft and credit report issues. We are here for you. Call us now at (212) 500-6114.

How identity theft affects your credit score

When an identity thief gains access to your personal information, they can use it for various fraudulent activities, such as opening new credit accounts in your name, making unauthorized purchases, or even taking out loans. These unauthorized transactions can severely damage your credit score in several ways, which we breakdown even further here in our free guide on identity theft and your credit report:

  • Late payments: Identity thieves often do not pay the bills they rack up in your name, resulting in late payments reported to credit bureaus. Late payments are one of the most significant factors affecting your credit score, and the impact can last up to seven years.
  • Increased credit utilization: Thieves can max out your credit cards or open new accounts in your name, drastically increasing your credit utilization ratio. A high credit utilization ratio can lower your credit score, as it suggests you are reliant on borrowed money.
  • Hard inquiries: When a thief applies for credit in your name, hard inquiries are made on your credit report. Multiple hard inquiries in a short period can negatively affect your credit score, as they indicate that you are actively seeking credit and may be a higher risk borrower.
  • New fake accounts: Fraudulent accounts opened in your name can lower your credit score by decreasing the average age of your credit accounts. A longer credit history typically results in a higher credit score, so the opening of new, unauthorized accounts can have a negative impact.

How Do I Know if My Identity Has Been Stolen and Shows On My Credit Report?

Be sure to monitor your credit report for:

  • Unfamiliar accounts: If you notice accounts on your credit report that you did not open, it could be a sign of identity theft. Be sure to investigate any unfamiliar accounts thoroughly.
  • Inquiries you didn’t initiate: If you see hard inquiries on your credit report that you did not authorize, it could indicate that someone is attempting to open accounts in your name.
  • Unfamiliar charges: Keep a close eye on your credit card and bank statements for any unauthorized charges. This could be a sign that your information has been compromised.

For detailed steps on what to do if your identity is stolen, click here:  https://consumerprotection.net/what-to-do-if-your-identity-is-stolen/

How to dispute errors on your credit report

If you find errors on your credit report due to identity theft, it’s essential to dispute them as soon as possible. Here is our free 5-step guide on how to properly dispute your credit report.   

Some things to keep in mind when disputing a credit report are:

  • Contact the major credit bureaus: Notify the three major credit bureaus (Experian, Equifax, and TransUnion) of the errors on your credit report. Provide them with evidence of the fraudulent activity, such as police reports or letters from creditors acknowledging the fraud.
  • File a dispute with the creditor: Contact the creditor that reported the incorrect information and inform them of the mistake. Provide them with any supporting documentation and request that they correct the error.
  • Monitor your credit report: Keep an eye on your credit report to ensure that the errors are corrected and no new fraudulent activity occurs.

Reporting identity theft to credit bureaus and authorities

If you suspect you’ve been a victim of identity theft, it’s essential to report it immediately to help minimize the damage. Here are the steps you should take:

  • Place a fraud alert on your credit reports: Contact one of the three major credit bureaus (Experian, Equifax, or TransUnion) to place a fraud alert on your credit reports. This will make it more difficult for the identity thief to open new accounts in your name.  Note:  placing a fraud alert on your account is NOT a substitute for disputing the specific instances of identity theft, in writing, with every credit reporting agency that is including the bogus account on your credit report.  To get more information about disputing an inaccurate credit report, click here:  https://consumerprotection.net/how-to-dispute-credit-report-errors/
  • Report the theft to the Federal Trade Commission (FTC): Visit IdentityTheft.gov to file a report with the FTC. This will help law enforcement track down and prosecute identity thieves.
  • File a police report: Report the identity theft to your local police department. This will provide you with essential documentation to dispute fraudulent activity on your credit report. (Note: Be sure to provide a copy of the police report with your dispute letter to the credit reporting agency.)

How should you respond to the theft of your identity

In addition to reporting the theft to credit bureaus and authorities, it’s essential to take additional steps to protect your credit health:

  • Close fraudulent accounts: Contact the creditors of any fraudulent accounts opened in your name and request that they close the accounts immediately.  To get more information on how to dispute a fraudulent account directly with a lender, click here (https://consumerprotection.net/what-to-do-if-your-identity-is-stolen/)
  • Change passwords and PINs: Update the passwords and PINs for your online banking and credit accounts to prevent further unauthorized access.
  • Consider identity theft protection services: Consider enrolling in a legitimate and reputable identity theft protection service to help monitor your personal information and alert you to any suspicious activity.

Seeking legal help: Find the Best Identity Theft lawyers in New York and New Jersey for Your Case

If you’ve been a victim of identity theft and are struggling to resolve the issue, it may be beneficial to seek legal help. Identity theft lawyers will help you in disputing errors on your credit report, negotiating with creditors, & pursuing legal action against the responsible parties. Dealing with  identity theft is a an area of law that many general practitioners know very little about. It is important to speak with a law firm that has years of experience in this particular area and is familiar with the relevant consumer protection statutes. 

Identity theft advocacy is a core practice area at Schlanger Law Group.   We litigate on behalf of victims of identity theft and credit reporting inaccuracy every day.  Call us now at (212) 500-6114.

Preventing future identity theft and safeguarding your credit score

Protecting your personal information and staying vigilant can help prevent future instances of identity theft and safeguard your credit score. Here are some tips to help you stay protected:

  • Regularly monitor your credit report: Keeping a close eye on your credit report can help you identify any suspicious activity early on. You can request a free credit report from each of the three major credit bureaus once a year at AnnualCreditReport.com.
  • Use strong, unique passwords: Create strong and unique passwords for all of your online accounts. Avoid using easily guessable information, such as your birthdate or pet’s name.
  • Be cautious when sharing personal information: Only provide your personal information when necessary and to trusted sources. Be cautious of phishing scams and unsolicited phone calls or emails requesting personal information.

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