The Potential Impact of Identity Theft

The recent Equifax data breach has many consumers questioning how worried they should be about identity theft. The answer is very worried. Think about all the credit-related transactions you’ve made - or plan to make - over the course of your life. Not only could a thief make these same transactions under your name, they could mess up your records so badly that you have a hard time making transactions of your own.

Thieves can open accounts in your name. If you’ve signed up for credit monitoring, you’ll learn about fraudulent accounts sometimes within moments of them being reported to the credit bureaus. WIthout credit monitoring, you may not find out until you check your credit report or you receive a bill in the mail about an account you never opened.

Your credit can be impacted. Thieves aren’t going to pay the bills on the fraudulently opened accounts. That means the late payments will hit your credit report and could potentially ruin your credit score, making it harder to get approved for accounts of your own. Signing up for credit monitoring (ideally a free one) will allow you to get alerts about new accounts opened in your name. The sooner you know, the sooner you can clear up the acccounts before you need to apply for something.

You’re always at risk. It’s difficult to get a new social security number, so once your personal information is out there, you’re always at risk of identity theft.

You can place an extended fraud alert on your credit report. It lasts seven years and tells businesses to take extra steps to confirm your identity before approving credit applications. You can also place a security freeze on your credit report. The freeze locks your credit report preventing business from running a credit check at all.

Of the two, the security freeze is more secure, but keep in mind that you’ll have to temporarily unlock your credit report whenever you want to apply for new credit.

You’re ultimately responsible for fixing identity theft. Even though you didn’t open the accounts, they were opened in your name and the creditors will hold you responsible for the payments until you prove the accounts weren’t yours. You may even face legal costs if a company sues you for an unpaid debt that was created in your name.

It takes time and money to clear up identity theft. Probably the worst thing about identity theft is that it’s up to you to fix it. Each time a thief opens an account in your name, you have to work with the business to have the account marked as fraudulent. Then, you have to work with the credit bureaus to have the account removed from your credit report. It can be time-consuming, which is why freezing your credit report is a great step to take to prevent theft.

If you’ve already been a victim of identity theft, file police report and complete an ID Theft Affidavit from the Federal Trade Commission. Keep copies of these two documents on hand to make it faster and easier to deal with any new accounts that are opened up using your information.