Our editorial team is independent and objective. To help support our review work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the CreditMashup site. This site does not include all companies or products available within the market.

We also include links to advertisers’ offers in some of our articles; these “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content.

While we work hard to provide accurate and up to date information that we think you will find relevant, CreditMashup does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof. Here is a list of our partners who offer products that we have affiliate links for.

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

Identity theft is when someone wrongfully uses another person's personal data to obtain credit, loans, file taxes, and more without consent.

Identity theft is a serious crime that can have a devastating impact on victims. It can lead to financial losses, ruined credit, and even criminal charges.

According to the Federal Trade Commission (FTC), identity theft is the fastest-growing form of crime in the United States. In 2021, there were over 8.2 million identity theft reports filed with the FTC, representing a total loss of over $33 billion.

What is Identity Theft

Identity theft is when someone wrongfully uses another person’s personal data to obtain credit, loans, file taxes, and more without consent.

On a basic level the personal data can include your name, driver’s license or state identification and Social Security. On a broader level identity theft can occur multiple ways and each one can affect you differently.

The Federal Trade Commission states identity theft primarily occurs in these categories:

  • Account Takeover Fraud: This type of fraud is when someone gains access and control of one or more of your accounts without your knowledge.
  • Bank Fraud: 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.
  • Biometric ID Theft: This type of theft involves stealing or spoofing a person’s physical or behavior characteristics to unlock a device giving a thief access to digital wallets as well as private information.
  • Child Identity Theft: Family members can use Social Security numbers, birthdays, and more to open fraudulent accounts or to apply for government benefits, take out loans and end up ruining a child’s good name and rack up debt in the child’s name.
  • Credit Card Fraud: The thief uses someone else’s credit card or credit card number to make fraudulent purchases.
  • Debit Card Fraud: This type of fraud can occur whether or not a criminal has your physical debit card in their possession to make unauthorized transactions.
  • Driver’s License Identity Theft: This type of theft can land you with unknown tickets and citations if you lose your driver’s license. Once your driver’s license number is in someone else’s hands, a criminal could falsely use it during a traffic stop to avoid a citation—which means it could end up on your driving record.
  • Employment Fraud: A criminal uses someone else’s Social Security number and other personal information to gain employment.
  • Government Documents or Benefits Fraud: The criminal uses stolen personal information to obtain government benefits.
  • Home Title Fraud: Sophisticated scammers can steal components of your identity to change the title to your property. At that point, they can use your home equity to gain access to loans and lines of credit.
  • Internet-Connected Device Theft: This type of identity theft occurs when someone exploits a security flaw in an internet-connected device to gain access to your personal data.
  • IRS Fraud: This type of identity fraud happens when someone uses your personal information, including your Social Security number, to file a tax return in your name and collect a refund.
  • Mail Identity Theft: When your mail is tampered with you find yourself with missing checks, credit and debit cards, bank statements and anything containing personal details.
  • Medical Identity Theft: If someone poses as another person in order to receive medical services the end result could be bills for medical services, prescriptions or goods.
  • Mortgage Fraud: If a homeowner’s Social Security number and mortgage account number is compromised, that information might be used to take out a home equity line of credit or second mortgage.
  • Online Shopping Fraud: The scammers have outdone themselves with this type of fraud. From hacking shopping websites to setting up phony shopping sites, thieves can easily gain access to your credit card information through online shopping fraud.
  • Phone or Utilities Fraud: The criminal uses another person’s personal information to open a wireless phone or utility account.
  • Senior Identity Theft and Scams: Scammers love the elderly, but not in a good way. The FTC reports that older consumers who experience fraud typically incur greater financial losses than younger folks.
  • Social Security Number Identity Theft: If identity thieves end up with your Social Security number it can be used to open fraudulent credit accounts and unpaid debt will be racked up in your name. This will lead to ruining your credit reports and negatively impacting your credit scores.

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 affects your credit reports.

5 Steps to clear up your credit due to identity theft

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 Fraudulent Accounts Directly with the Credit Bureaus

Another option is to go the route of disputing the fraud accounts with the credit bureaus but they may require supporting documentation such as the Identity Theft Report.

That’s why it’s important to follow-through on all the recommended steps because even charge-offs due to identity theft can be removed if you have the proper documentation.

If not, they may verify the accounts as accurate resulting in the fraud accounts remaining on your credit reports. 

Top Identity theft protection strategies

A professional identity theft protection service looks for threats to your identity. You are alerted of potential threats by text, email, phone or mobile app. If you become a victim of identity theft, a U.S.-based Identity Restoration Specialist will work to fix it. Plus, you’ll be reimbursed funds stolen due to identity theft up to the limit of your plan.

You can combat identity theft on your own using several preventative strategies like these:

1. Password Manager.

Never use the same password for all your online activities. A password managers stores all your password-related information on your device. You can use them to fill in the credentials for your accounts with a click and do not need to do it manually. These password managers are a secure method to create records of all your passwords for future reference.

2. Credit card protection.

If you have the option, choose a chip and PIN credit card. It’s the most secure type of credit card and will help to protect you from fraud. These cards require the consumer to enter a unique number that only they know in order to use the card. This means that there is no personal information on the card itself, so thieves will not be able to steal it without being caught.

3. Only use secure websites.

Secure websites begin with “HTTPS,” or Hypertext Transfer Protocol Secure. If a web page is not secure, don’t enter your credit card number on it.

4. Be on the lookout for skimmers.

You will likely encounter a credit card skimmer on ATMs, fuel pumps, and other places that thieves use to steal your credit card information. Skimmers are placed where you normally insert your card so they can “skim” data from the magnetic strip at the back of it.

5. Exercise caution when posting on social media.

Don’t post sensitive information on social media. Thieves comb through social media looking for clues about you, your financial data and location. Your friends may not be the only people checking out your vacation photos on Instagram. Thieves may break-in while you’re away.

6. Use mobile payment apps.

Mobile payment apps like Apple Pay or Samsung Pay use tokenization technology to safeguard your credit card account numbers and data. It can be a safeguard your credit card numbers from skimming machines.

7. Use a virtual credit card number online.

Virtual numbers are a way to use your credit card online without using your actual credit card number. You can request virtual account numbers from issuers and use them for the entire day or up to 24 hours, depending on which is shorter.

8. Cloud Backup.

A cloud, remote, or online backup can help you if you’re ever hacked. It is a recovery method where data owners can store their information off-site through their network.

9. 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.

Identity Theft Signs

Here are some of the most common signs of identity theft:

  • Unfamiliar bank or credit card transactions. If you see charges on your account that you don’t recognize, it’s a sign that someone may have stolen your information and used it to make purchases.
  • Unfamiliar inquiries on your credit report. If you see inquiries on your credit report that you didn’t authorize, it’s a sign that someone may have applied for credit in your name.
  • Unexpected bills or statements. If you receive bills or statements for things you didn’t purchase, it’s a sign that someone may have used your information to open new accounts.
  • Unexpected lack of bills or statements. If you don’t receive bills or statements for things you normally do, it’s a sign that someone may have changed the mailing address on your account.
  • Surprise credit score drop. If your credit score drops for no apparent reason, it could be a sign that someone has opened new accounts in your name and is not making payments on them.
  • Denial of loan or credit applications. If you’re denied for a loan or credit card, it could be a sign that someone has opened new accounts in your name and maxed out the credit.
  • Calls from debt collectors. If you receive calls from debt collectors for debts you don’t owe, it’s a sign that someone may have used your information to make purchases.
  • Unusual activity on your Social Security account. If you see unusual activity on your Social Security account, such as a change in your address or the reporting of earnings you didn’t earn, it’s a sign that someone may have stolen your Social Security number.

If you notice any of these signs, it’s important to take action immediately. You can:

  • Place a fraud alert on your credit report. This will let creditors know that you may be a victim of identity theft and they should take extra steps to verify your identity before opening new accounts in your name.
  • File a police report. This will help you document your case and may be necessary if you need to file a lawsuit.
  • Contact the creditors or businesses where you see unauthorized activity. Let them know that you’re a victim of identity theft and ask them to investigate the charges.
  • Get a copy of your credit report and review it for any errors. If you see any unauthorized accounts, dispute them with the credit bureaus.
  • Monitor your credit report for any new activity. You should check your credit report at least once a year for any signs of unauthorized activity.

By taking these steps, you can help to protect yourself from the financial and emotional consequences of identity theft.

Explore More

Disclaimer: A OneUnited Checking Account is required to apply.

Join the family!

Get expert tips, news, and resources delivered to your inbox weekly.

You have been successfully Subscribed! Ops! Something went wrong, please try again.

Get In Touch

6080 Center Dr, 6th Fl
Los Angeles, CA 90045

© 2024 All Rights Reserved.