One of the biggest impacts of  identity theft is the impact on the victim’s credit score.

Because thirty-five percent of a person’s credit score consists of payment history, an identity thief who steals someone’s Social Security number to open fraudulent accounts can cause that person’s credit score to plummet if these bills go unpaid.

“Too often a victim does not learn of the identity theft until a mortgage originator pulls his credit score in preparation for a home loan,” said Paul Wylie, the founder and former owner of Metrocities Mortgage. “I have watched ideal borrowers walk away from their dream homes or pay significantly higher interest rates because they cannot repair the damage of identity theft fast enough to secure a home loan.”

The same is true of any large purchase. A lower credit score means a borrower will not only pay more on his home loan, but also on his car loan, investment property, or business loan.

Those who plan on making a major purchase or refinancing should be particularly concerned about identity theft, taking several steps to help protect their credit scores from would-be thieves:

• Prepare early by requesting and reviewing your credit report each and every month. (Contrary to popular belief, a person will not hurt his credit score by pulling his own report.) Check the report for any derogatory accounts or new accounts that do not belong to you.
• Consider investing in an identity theft protection product which will monitor your personal credit information, alert you if key changes are detected, and reimburse you for any lost or stolen funds.
• Consider placing a fraud alert on your credit report. Fraud alert messages notify creditors to verify a person’s identification before extending credit in that person’s name.
• Consult with a mortgage originator about maintaining or increasing a credit score to more than 720, the cutoff that usually determines whether you will get the best terms on your loans. By keeping a score that is higher than 720, you have a buffer in the event identity theft causes your score to plunge.
• Start by lowering your credit card balances to less than thirty percent of your limit, said Tirone. Outstanding balances constitute thirty percent of a person’s credit score, so lowering the balance-to-limit ratio can quickly boost your score.
• Above all, never give a person or company your Social Security number unless they have a legitimate reason for knowing it. If a company doesn’t need to check your credit, they most likely don’t need your Social Security number. If a company asks for your Social Security number, ask them why they need it, what they will do to protect it, and what will happen if you refuse to give them your number. Unless you are applying for credit or opening an account that requires a credit check, many companies will move forward without your Social Security number.

Though consumers can take steps to help protect themselves from identity theft, not all identity theft can be avoided. If you have been victimized and plan to make a large purchase or refinance, the following steps will help you reclaim your identity:

• Start by canceling all fraudulent accounts that have been opened in your name. If an existing account has been compromised, change the account number. Either way, contact each credit card company by phone and follow up with a letter and copies of supporting documentation.
• Because the identity thief might have your Social Security number, alert all of your creditors, even if those particular accounts have not been affected. Ask your creditors to contact you if any suspicious activity appears on your account.
• File an Identity Theft Complaint with the Federal Trade Commission (FTC). The FTC can be contacted by phone at (877) 438-4338 or in writing at:

Identity Theft Clearinghouse

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington D.C. 20580

• File an Identity Theft Report with the police department. The police report will help prevent creditors and collection companies from collecting debts that result from identity fraud. Additionally, filing this report,may prevent fraudulent information from making its way onto your credit report.
• Call the fraud divisions of each of the three credit-reporting bureaus listed below and ask to place fraud alerts on your credit reports. A fraud alert will mandate that all potential lenders speak directly to you before authorizing a new line of credit. By requesting fraud alerts, you can take steps to ensure that that no new accounts will be opened in your name without your direct consent.  Send copies of your Identity Theft Report and Identity Theft Complaints to each of the three credit-reporting bureaus with all supporting evidence.
• Present your lender with all supporting documentation—at a minimum, your Identity Theft Report and Identity Theft Complaints. Some lenders have mechanisms that allow the credit bureaus to fast-track changes to your credit report; others might make an exception to your loan if you give them enough evidence.

Worried about Identity Theft? Get a FREE Credit Report Instantly from ProtectMyID.com and check for warning signs!

Related posts:

1. Reclaiming Your Identity After Identity Theft
2. Does It Matter When You Report An Identity Theft?
3. How To Protect Children From Identity Theft
4. How To Prevent Medical Identity Theft
5. Identity Theft Costs Victims $1,882 on Average – FTC Report

Tagged as: bad credit, Credit, Credit Bureau, credit report, credit score, Identity Theft

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