Monitoring your credit report should be among the highest priorities for those victimized by identity theft.

Becoming a victim of identity theft, which may negatively impact your credit score, can hinder your ability to live a financially free life.

Those with mediocre or poor credit scores find themselves paying a higher mortgage than their neighbors. They have trouble saving due to high interest rates. And some might be unable to rent or find employment. By taking immediate action, identity theft victims can salvage economic futures and financial reputations.

Credit Score Basics

First, lets start with the basics.  A credit score is more than a three-digit number: it’s a measure of a person’s financial reputation. Creditors, landlords, and even some employers consider a person’s credit score before deciding whether they will approve a loan, lease an apartment, or hire an applicant. Believe it or not, even automobile insurance companies consider credit when determining insurance premiums.

A person’s credit score is one of the many casualties of identity theft, which can artificially lower a person’s credit score and cause a victim to pay higher interest rates, lose job opportunities, or be turned down for loans.

The general rule of thumb is this: a credit score above 720 is considered excellent, and a person with a 720 or higher will have a very good chance of securing a loan, job, or apartment. A score below 620 is not-so-good, and it translates to higher interest rates, hefty down payments, and lost job opportunities.

Credit scores are usually calculated by three credit reporting companies—Experian®, Equifax®, and TransUnion®—and are based on a five-part equation:

• The majority of a person’s credit score—thirty-five percent—is determined by whether he pays his bills on time.
• Outstanding balances are next, making up thirty percent of the score. The lower the balance-to-limit ratio, the better the score.
• Fifteen percent of a score considers account age. Older accounts are better than younger accounts.
• The type and mix of credit makes up ten percent of a score. The healthier the mix of credit, the better the score.
• The number of inquiries from creditors into a person’s score also constitutes ten percent.

A credit score answers this question: What is the likelihood that this person will pay his or her bills on time? A high score means a person is likely to pay bills on time; the lower the score, the more likely a person is to miss payments.

Identity Theft: the Credit-Score Killer

One of the casualties of identity theft is that it throws a person’s credit score out of whack for several reasons:

1. If an identity thief uses a person’s existing credit to make purchases, victims might find themselves unable to pay their inflated credit card bills, resulting in late payments that hurt a credit score. Sometimes identity thieves redirect credit card bills so that the victims do not notice the fraudulent activity on the account. If a person doesn’t receive his bill, he might not pay his bill on time, and this will cause his score to drop.
2. Identity thieves open accounts in their victims’ names. When they fail to pay the bills, the victims’ credit scores plummet.
3. Identity thieves can empty bank accounts, leaving a victim with no means of paying rent, mortgages, car payments, credit cards, or other bills.
4. High-tech hackers can steal a cellular telephone account (called phreaking) and make lengthy, over-seas calls that are charged to the victim’s phone bill. Though utility bills are generally not considered in a person’s credit report, they can harm a score if turned over for collections, a real possibility if a bill is outrageously high and the borrower is unable to pay.

Reclaiming Your Identity after Identity Theft

Although fraudulent activity might have already made its way onto your credit report, you can take immediate steps to reclaim your identity following identity theft.

• Start by canceling all credit accounts that have been compromised. Contact each credit card company by phone and follow up with a letter and documentation.
• Because the identity thief might have your Social Security number, be sure to tell all other creditors that you are a victim of identity theft. 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 be useful in providing details to credit card companies and credit reporting companies. Reports are also helpful in preventing creditors and collection companies from collecting debts that result from identity fraud. Additionally, the filing of these reports 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 a fraud alert 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 issuing fraud alerts, you are taking steps to ensure that no new accounts will be opened in your name without your direct consent. In fact, consumers can ask that a fraud alert be placed on their credit report even if they have never been a victim of identity theft.

Experian

PO Box 1017

Allen, TX 75013

(888) 397-3742

Equifax

P.O. Box 740250

Atlanta, GA 30374

(800) 525-6285

TransUnion

P.O. Box 6790

Fullerton, CA 92634

(800) 680-7289

• Send copies of your Identity Theft Report and Identity Theft Complaints to each of the three credit-reporting bureaus with all supporting evidence. Be sure to keep detailed records of all conversations and written correspondence.

Consider investing in an identity theft protection product, such as ProtectMyID.com, which will monitor your personal credit information, alert you if key changes are detected, and reimburse you for any lost or stolen funds.

9 million Americans have their identity stolen each year. Ger your Free ID Theft Check. By Experian®

Related posts:

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

Tagged as: bad credit, Credit, Credit Bureau, credit card, credit report, credit score, equifax, experian, Identity Theft, TransUnion Credit Bureau

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