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Rebuilding Your Credit Record After Identity Theft

By: Sarah Knowles BA, MA - Updated: 20 Sep 2012 | comments*Discuss
 
Identity Theft Credit Record Credit

Because it involves money, some people mistakenly believe that identity theft is a victimless crime. Not so. If your identity is stolen, the ramifications can be far-reaching – and can affect you not only financially, but emotionally as well.

When it comes to identity theft, the practical implications for your financial situation can be enormous. Unless you sort things out, you may eventually have difficulty opening up a new bank account, getting a mortgage or buying a car.

The perpetrator of the fraud could even use your identity to participate in criminal activities, making you potentially liable for a crime, or crimes, about which you knew nothing. Luckily, however, there is a way out...

All About Credit Scoring

Lenders - such as banks and mortgage companies – use credit scoring to see if you are a person worthy of lending money to. What that means, in essence, is they look back over your past credit experiences, to determine whether or not you are a credit risk, meaning someone who is likely to default on a loan.

Lenders normally check the following information to learn more about you:

  • Credit reference agencies
  • Fraud databases
  • Previous dealings with that specific lender
  • Previous dealings with other lenders

If you are denied credit and the reason doesn't make sense – for example, if you are told you defaulted on a £10,000 loan in 1975, when you were only four years old – then you may have been the victim of identity theft. If so, you will have to rebuild, or repair, your credit before you can move on.

What is Credit Repair?

Rebuilding your credit record, or credit repair, is vital when it comes to getting yourself back on the right track. Follow these steps to get yourself back on track as quickly as possible:

  • First of all, call the police at once and file a police report stating that you have been the victim of identity theft.
  • Secondly, if you have identity theft insurance, or if your bank offers you identity theft insurance, speak to their specialised identity theft people for how to proceed. If not, obtain a copy of your credit report from one of the three main credit reporting bureaus yourself. Go through it with a fine-toothed comb, taking notes of anything that looks suspicious or invalid.
  • Then, file a dispute for every single item you want to take issue over, with each and every one of the credit reference agencies. Be persistent and don't take no for an answer. Write down every conversation you have and take notes.
Keep in mind that credit repair companies that tell you they can erase bad credit should not really be trusted. Bad credit can only be expunged if it was there for a fraudulent reason. You are, in effect, paying a credit repair company to do something you can easily do yourself.

Your credit rating is important because it will determine whether or not you will receive loans in future, whether you will get a mortgage, and whether you will even have access to a credit card with a decent interest rate.

If you have been a victim of identity theft and the end result is a damaged credit rating, you will need to do all you can to get it back in shape. Depending on the circumstances, this may be fairly easy, or it may be a long, hard slog.

Still, rebuilding your credit record after identity theft is vitally important to your financial future, so take the time to sort things out properly. You will not regret it.

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