Identity theft is a growing concern, affecting millions of people each year. When someone steals your personal information—such as your Social Security number, credit card details, or bank account information—they can open fraudulent accounts, take out loans in your name, or rack up debt that damages your credit.
If identity theft isn’t caught quickly, it can wreak havoc on your financial future. Fortunately, if you’ve been a victim, there are steps you can take to minimize the damage and restore your credit. In this guide, we’ll walk you through how identity theft impacts your credit report and what to do if you suspect you’ve been targeted.
How Identity Theft Affects Your Credit Report
When an identity thief gains access to your personal information, they can use it to:
- Open new credit cards or loans in your name
- Make unauthorized purchases on existing accounts
- File fraudulent tax returns to claim refunds
- Use your information for employment or medical services
- Drain your bank accounts or make wire transfers
These fraudulent activities can significantly lower your credit score by increasing your debt, creating late payments, and adding hard inquiries from unauthorized credit applications. If left unresolved, identity theft can make it difficult for you to obtain loans, secure housing, or even pass background checks for employment.
Signs That You May Be a Victim of Identity Theft
Identity theft isn’t always immediately obvious, but there are key warning signs to watch for:
- Unfamiliar accounts or transactions on your bank or credit card statements
- Credit denials for no apparent reason
- Debt collection calls for accounts you never opened
- Incorrect information on your credit report, such as unknown loans or inquiries
- Missing mail or unexpected notices about accounts you didn’t authorize
- IRS notices indicating multiple tax returns were filed in your name
If you notice any of these red flags, you should take immediate action to protect your credit and financial identity.
What to Do If You’re a Victim of Identity Theft
Step 1: Place a Fraud Alert on Your Credit Report
As soon as you suspect identity theft, contact one of the three major credit bureaus—Experian, Equifax, or TransUnion—and request a fraud alert on your credit file. The bureau you contact will automatically notify the other two.
There are two types of fraud alerts:
- Initial Fraud Alert – Lasts one year, free, and available to anyone who suspects identity theft.
- Extended Fraud Alert – Lasts seven years, available if you’ve filed a police report or identity theft report with the FTC.
A fraud alert warns potential creditors to take extra steps in verifying your identity before approving any new credit in your name.
Step 2: Check Your Credit Report for Unauthorized Activity
You’re entitled to a free credit report every 12 months from each of the three bureaus at AnnualCreditReport.com.
Carefully review your report for:
- Accounts you didn’t open
- Hard inquiries from lenders you didn’t apply with
- Incorrect personal information, such as addresses or names
If you find fraudulent accounts, write down all errors and prepare to dispute them.
Step 3: File an Identity Theft Report with the FTC
Go to IdentityTheft.gov to report the fraud to the Federal Trade Commission (FTC). The FTC will generate an Identity Theft Report, which serves as official documentation when disputing fraudulent accounts.
The FTC report will help you:
- Remove fraudulent accounts from your credit report
- Get extended fraud alerts and credit freezes
- Deal with creditors and debt collectors
Step 4: File a Police Report (If Necessary)
In some cases, you may need to file a police report, especially if:
- A lender or credit bureau requires it to process your dispute
- The identity thief used your information for crimes such as fraud or tax fraud
- You know the identity of the person who stole your information
Provide law enforcement with your FTC report, credit report evidence, and any other relevant documents.
Step 5: Freeze Your Credit (Optional but Recommended)
A credit freeze prevents lenders from accessing your credit report, making it nearly impossible for identity thieves to open new accounts in your name.
To place a credit freeze, you must contact each of the three major credit bureaus separately. A freeze won’t affect your current accounts but will stop new credit applications, making it a strong protection tool.
Step 6: Dispute Fraudulent Accounts with Credit Bureaus
If identity theft resulted in unauthorized accounts appearing on your credit report, you need to dispute them immediately with the credit bureaus.
To file a dispute:
- Contact Experian, Equifax, or TransUnion online, by phone, or via mail
- Submit your FTC Identity Theft Report and any supporting documents
- Clearly explain which accounts or transactions are fraudulent
The credit bureau must investigate within 30 days and either correct or remove the fraudulent items. Alternatively, you can hire a credit dispute lawyer to dispute it for you.
Step 7: Contact Affected Creditors and Banks
Reach out to any financial institutions where fraud occurred. Request:
- Account closure or freeze for any fraudulent accounts
- Removal of unauthorized transactions
- Confirmation letters stating that fraudulent accounts were closed
Many banks have dedicated fraud departments that can assist in securing your accounts.
Step 8: Change Passwords and Secure Your Accounts
Update your passwords and security questions for:
- Online banking and credit card accounts
- Email and financial websites
- Social media and shopping accounts
Use strong, unique passwords and enable two-factor authentication (2FA) whenever possible.
How an FCRA Lawyer Can Help You Recover
If identity theft has severely damaged your credit and creditors or credit bureaus refuse to correct fraudulent information, an FCRA lawyer in Chicago can help you:
- Dispute credit report errors that credit bureaus fail to remove
- Hold financial institutions accountable if they continue reporting fraudulent debt
- Seek compensation if you suffered financial losses due to identity theft
- Take legal action if your rights under the Fair Credit Reporting Act (FCRA) were violated
Protect Yourself from Future Identity Theft
- Monitor your credit regularly using free services like AnnualCreditReport.com or a credit monitoring service.
- Shred sensitive documents to prevent dumpster diving fraud.
- Be cautious of phishing scams and never provide personal details over email or phone unless you initiated the contact.
- Use secure Wi-Fi networks and avoid public Wi-Fi for financial transactions.
- Check your financial statements frequently for unusual transactions.
Final Thoughts: Take Action Quickly to Protect Your Credit
Identity theft can be stressful, but taking immediate action can help minimize the damage. By placing a fraud alert, disputing fraudulent accounts, and seeking legal help if needed, you can regain control of your credit and financial security.
