What is Identity Theft: 5 Steps to Clear Up Your Credit

what-is-identity-theft

Nearly 60 million Americans have been affected by identity theft, according to a 2018 online survey by The Harris Poll.

Identity theft is when your personal information is stolen — like your name, address, Social Security number and used without your consent.

Given the prevalence of identity theft, it’s surprising that many consumers feel confident they are safe online even though hackers have proven otherwise.

A 2017 Report released by Norton by Symantec, said hackers stole $19.4 billion from 143 million consumers in 2016. Each victim spent an average of nearly 20 hours dealing with the aftermath.

What is Identity Theft

On a basic level identity theft is when a thief takes your personal or financial information like your name, driver’s license or identification and Social Security number to impersonate you.

Identity theft can occur on many levels. According to the Federal Trade Commission, identity theft can occur in several different categories:

Employment- or tax-related fraud (34%): A criminal uses someone else’s Social Security number and other personal information to gain employment or to file an income tax return.
Credit card fraud (33%): The thief uses someone else’s credit card or credit card number to make fraudulent purchases.
Phone or utilities fraud (13%): The criminal uses another person’s personal information to open a wireless phone or utility account.
Bank fraud (12%): The fraudster uses someone else’s personal information to take over an existing financial account or to open a new account in someone else’s name.
Loan or lease fraud (7%): A borrower or a lessee uses someone else’s information to obtain the loan or lease.
Government documents or benefits fraud (7%): The criminal uses stolen personal information to obtain government benefits.

Identity theft can happen to anyone, and the effects can be more than just an inconvenience.

Now that we’ve established “what is identity theft” – knowing what to do when identity theft occurs is key to recovering your identity.

5 Steps to clear up your credit

1. Fraud Alert.

Alert one credit reporting agency of fraud and they will alert the other credit reporting agencies and place a fraud alert in your files to prevent further accounts from being opened. You would be entitled to a free credit report from each of the three credit reporting agencies. The fraud alert will remain on the credit reports for twelve months. The alert notifies potential lenders that you may be a victim of fraud and encourages them to take extra steps to verify your identity before approving any applications in your name.

If you feel more comfortable with a longer fraud alert, you can add an extended fraud victim alert which lasts seven years. The extended victim alert states that you are a victim of fraud and asks that the lender call you at one of two telephone numbers you provide. A lender would then be able to call to verify your identity before granting credit in your name.

2. Consider Freezing Credit Reports.

The credit report security freeze will prevent the credit bureaus from providing your credit report to anyone without your approval. Currently there is no charge for credit freezes. You can unfreeze your credit temporarily if you need to apply for credit.

3. Contact Credit Company.

Call and follow-up in writing (certified mail, return receipt) the fraud department of the credit accounts. You want to notify the credit card companies in writing to keep a paper trail. Request their dispute form for victims of identity theft. Request they remove whatever negative information is showing on your credit reports due to this fraud. But before you return the dispute form add your supporting documentation as described below.

4. File a Police Report.

A crime has taken place and filing a police report can help get the negative accounts removed from your credit report. Your local law enforcement will be able to help you in filing a report. This step is not required but it helps when charges are involved and it puts pressure on credit card companies to remove negative credit due to fraud. Include as much information as possible in the report, such as the names of any accounts opened fraudulently.

5. Identity Theft Report.

The Federal Trade Commission which governs the Fair Credit Reporting Act, provides an Identity Theft Recovery Plan. This plan can help you get the negative information removed from your credit reports.

According to the FTC: “…If the company has already reported these unauthorized accounts or debts on your credit report, an Identity Theft Report will require them to stop reporting that fraudulent information.”  They have a cover letter you can send to the credit card company and a letter to the credit reporting agencies which explains the rights you have by using the Identity Theft Report.

More information can be found here regarding the FTC’s Identity Theft Report and how it works. You can use the Report to:

  • get fraudulent information removed from your credit report
  • stop a company from collecting debts that result from identity theft, or from selling the debt to another company for collection
  • place an extended fraud alert on your credit report
  • get information from companies about accounts the identity thief opened or misused

Dispute Directly with the Credit Bureaus

You can go the route of disputing the fraud accounts with the credit bureaus but they may require supporting documentation such as the Identity Theft Report before the accounts can be removed anyway. If not, they may verify the accounts as accurate resulting in the fraud accounts remaining on your credit reports.

As far as the addresses, dispute the incorrect addresses directly with the credit reporting agencies. Address disputes are usually removed without much problem. Continue to monitor your credit report for new activities by the identity thieves for several months.

Start monitoring your credit

Victims of identity theft should immediately utilize the FTC’s Identity Theft Report at identitytheft.gov. But regularly monitoring your credit allows you to act quickly which can minimize the damage. Plus, consider enlisting an identity theft protection service that helps prevent identity and aids in restoring your good name and offers insurance to financially recover should you become a victim.

 

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