Identity Theft and Your Credit Report: How to Detect and Recover

How Identity Theft Affects Your Credit Report

Identity theft can devastate your credit report and score. When someone opens credit accounts in your name, those accounts appear on your credit report as if they belong to you. If the thief misses payments or maxes out the accounts, your credit score can plummet.

The damage from identity theft can be extensive and long-lasting. Fraudulent accounts can remain on your credit report for years, and correcting the damage requires time, effort, and persistence. The sooner you detect identity theft, the easier it is to recover.

Regular credit monitoring is essential for detecting identity theft early. Many free credit monitoring services alert you to new accounts, hard inquiries, and other changes to your credit report in real time.

Steps to Take When You Discover Identity Theft

Contact the fraud departments of the three major credit bureaus immediately. Request that a fraud alert be placed on your credit reports. A fraud alert requires creditors to take extra steps to verify your identity before opening new accounts in your name.

Close any fraudulent accounts. Contact the fraud department of each company where an account was opened fraudulently. Explain that you are a victim of identity theft and request that the account be closed and marked as fraudulent.

File a report with the Federal Trade Commission at IdentityTheft.gov. The FTC will create a personalized recovery plan and provide pre-filled letters and forms that you can use to dispute fraudulent accounts.

Disputing Fraudulent Accounts

File a dispute with each credit bureau that is reporting the fraudulent account. Include a copy of your FTC Identity Theft Report, a copy of your government-issued ID, proof of your address, and a letter identifying each fraudulent account.

The credit bureau has 30 days to investigate your dispute. They must contact the creditor that reported the fraudulent account and request verification. If the creditor cannot verify that you opened the account, it must be removed.

Follow up on each dispute to ensure the fraudulent accounts have been removed. Request a new copy of your credit report after the investigation is complete and verify that all fraudulent accounts have been deleted.

Preventing Future Identity Theft

Place a credit freeze on your credit reports at all three major bureaus. A credit freeze is the most effective way to prevent new account identity theft because it blocks access to your credit report entirely. Credit freezes are free and can be temporarily lifted when needed.

Monitor your credit reports and financial accounts regularly. Set up alerts for new accounts, hard inquiries, and unusual activity. Review your bank and credit card statements monthly for unauthorized charges.

Protect your personal information. Shred documents containing sensitive information, use strong unique passwords for online accounts, enable two-factor authentication, and be cautious about sharing personal information over the phone or email.