If 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.
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.