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How can identity theft affect my credit score?

Credit Score Report on a Computer Monitor Cardoza Law CorporationIf you’re asking the question, you already know how important your credit score is. This key piece of information determines whether you can buy a house, lease a new car, and get a decent interest rate. So when all of this is jeopardized by an identity thief, you need to know how to fix it fast.

How an Identity Thief Can Lower Your Credit Score

First, the basics. When a thief gets ahold of personal information like your Social Security number, bank accounts, credit card accounts, and more, he or she can use it to open lines of credit in your name. Of course, the thief has no intention of PAYING those debts, so they sit unpaid in your name and on your credit reports. You may not even know they’re there unless you check your Equifax, Experian, and TransUnion credit reports often. Based on some of the components FICO uses for calculating your score, here are some of the ways identity theft can affect your score:

Poor Payment History

Even a single missed payment can drop your credit score, so the longer a bogus account sits on your credit report, the more damage it will cause. If a thief empties out your checking account and auto payments to legitimate creditors or utilities are missed, that can have an effect as well.

Maxed-Out Credit

It’s never good for your credit cards to be maxed out, but a thief won’t hesitate to do it and you’ll pay the price in a lower score if you don’t catch it quickly.

Multiple Credit Cards In Your Name 

If a thief gets multiple credit cards in your name, it can shorten the length of your credit history, lowering your score.

Too Many Credit Card Applications

Even after a thief begins to be rejected for new credit cards in your name, the fact that he is even applying for them can lower your score because the credit reporting agencies ding you for what they call hard inquiries.

These effects should be temporary if you realize your identity has been stolen and take steps to undo the damage.

How to Recover From Credit Identity Theft

I explained how to clear up debt in an earlier article, but in a nutshell, you will need to contact the credit reporting agencies and inform them that the accounts on your report are not yours. You will also need to contact the creditors who hold the accounts. Debt collectors may begin to contact you and harass you about the debt. In some of these cases, you may be able to take legal action against these agencies if they fail to take the bogus accounts out of your name. You do not have to suffer through this process alone! Contact me online or call my office directly at 855.982.2400 to find out if I can help you get out of this frustrating mess.

 

Michael F. Cardoza, Esq.
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U.S. Marine & Consumer Financial Protection Attorney dedicated to fighting debt and credit bureau harassment.