Has Identity Theft Ruined Your Credit?
According to Consumer Affairs, about 10% of Americans are victims of identity theft each year. Thieves often steal personal information (such as Social security numbers) to commit fraud. Many of them will open credit cards or other lines of credit in your name and then abscond with the gains, leaving you with the debt and shredded credit.
If you are facing financial stress, meeting with one of our Plantation bankruptcy attorneys might help. Below, we identify how identity theft can ruin a person’s credit and the steps to take to mitigate the damage.
Thieves Default on the Accounts They Open in Your Name
A thief might use your personal information to get a car loan, open a credit card, or apply for a personal loan. Unsurprisingly, once they get the money, they do not repay your debt for you! Instead, the debt is in your name—and your problem.
Many consumers are shocked to see their credit score tank. A little investigation reveals that someone took out a loan in their name and the loan is now in default, weighing down their credit score. The consumer panics, unsure of what to do.
You might think this rarely happens, but it happens all the time. Some lenders are careless about reviewing forms of identification to confirm that a borrower is who they say they are. And some loans can be taken out online or at payday lenders.
Your Credit Utilization Can Soar
Other thieves might steal your current credit card information and begin racking up charges. This increases your utilization, which is the percentage of available credit being used. Utilization typically makes up around 30% of a person’s credit score, so you could see your score tank because someone is piling up debt in your name.
How to Get Back on Track
Identity theft is a chilling experience, but you must take swift corrective action. We recommend the following:
- Put a credit freeze in place. This will make it impossible for someone to open a new credit account in your name.
- Pull a credit report and find out how many accounts have been opened in your name. Consumers are entitled to one free report a year.
- Quickly call your credit card companies if someone is using your card. Dispute the charges. You have 60 days to dispute a charge so don’t delay.
- Call the police and report the identity theft. Ask them what other steps you should take.
You will need to work with creditors to get them to accept that an account was opened fraudulently. Some might be resistant, and others will require massive amounts of documentation. You should not suffer the consequences when someone opens an account in your name, and you want all this negative information removed from your credit report.
Can Bankruptcy Help?
There are a couple situations where bankruptcy might be beneficial. First, you might have been struggling with debt loads even before the identity theft. In this situation, filing for bankruptcy might be prudent.
Second, some creditors might flat out refuse to release you from the fraudulent debts. If so, eliminating the debt via bankruptcy might be the safest and fastest way to make the debt disappear.
Contact Nowack & Olson today for a free consultation to learn more at 888-813-4737.