September 27, 2016

Is My Credit Score Ruined After Identity Theft?

The damage to your credit score after an identity theft can depend on a lot of factors: the strength and speed of your response, your ability to file a police report (some police districts try hard to pass the buck unless they have specific ID theft departments) and what kind of identity theft took place.  Employment identity theft, for example, isn’t likely to destroy your credit but might tangle up your taxes and benefits payments.

If you find a fraudulent account, dispute it, close it, and shut down your credit file completely for a few years then chances are your credit score isn’t going to be ruined at all.  The credit problems can get bad when the ID thief has had time to take out many new loans and lines of credit in your name.  Once that happens, getting it all cleaned off can be an uphill battle that takes years, and your credit score will suffer in the meantime.

One big mistake that some people make is they go ahead and file bankruptcy when things get overwhelming.  At that point none of the creditors can get to you, it’s true, but your credit score becomes damaged permanently at that point.  In addition, it doesn’t stop the problem: while getting credit will be far harder after that, your identity thief could just start taking out new accounts a few months later.

Another mistake people make is thinking that changing their Social Security number will help.  Unfortunately, it doesn’t.  The old report gets tacked on to the new SSN, and creditors tend to wonder if you were trying to duck your responsibilities instead of wondering whether or not you’ve been a victim of identity theft.

There’s no mistaking the fact that identity theft will continue to impact your life, perhaps years after the original crime.  The only way to battle it is to push through the problems.  You might have to rely on credit less for awhile, until you can manage to do so.  You might need to go through a lot of procedures and paperwork before it’s all done.  But it doesn’t have to ruin your credit score for life.  Make it difficult for the thief to get any benefit out of your identity, then continue to monitor your credit reports.  Tackle problems wherever you find them, as soon as you find them, and you will at least reduce the damage to your credit report, if not eliminate it entirely.

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