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Your Credit Score and Identity Theft

Did you know that your credit score can be one more indicator of identity theft?  Your credit score is typically used as an indicator of your experience using credit, and is obtained by potential lenders, landlords, and employers as an important indicator of how you have used debt in the past.  However, your credit score can also be a lagging indicator that someone else may be using your credit.  Let's take a look at what a credit score is, how it is affected by your own credit activities, and when you should be concerned about identity theft. 

Most of us are aware of the “big 3” credit bureaus. Anyone who has applied for a loan, store credit, or a lease knows that these three agencies – Equifax, Experian, and TransUnion – are the keepers of credit data. But what exactly do they track? These three bureaus alone maintain a credit database of over 200 million U.S. consumers. Anytime you apply for credit, the lender will need to assess the risk of the transaction. The best predictor of future payments is your ability to make past payments, hence your personal credit history. Credit bureaus track and compile this information, aggregating it into a credit score that helps the lender assess the risk and, in many cases, approve or set the appropriate interest rate.  Potential landlords and employers may also use the credit score a part of a more comprehensive background screening process.  

Your credit score is affected each time you obtain credit, whether it is a mortgage or home-improvement loan, a loan on your home's equity, a vehicle purchase loan, a personal loan, or any other line of credit, including credit cards. In fact, even the act of applying for credit at multiple locations, online or through mailed applications can have an impact on your credit score.  Part of your credit score is derived based on how many times you have attempted to get credit, especially if these inquiries are all within a very short time span.  And of course, your credit score is negatively impacted when you start to accumulate a history of late payments, if you have a line of credit that is closed for non-payment, or you have a bankruptcy event. The opposite is also true.  Maintaining multiple open lines of credit and making routine payments can increase your credit score.  Using credit is a personal choice and needs to be weighed carefully against your ability to make regular full payments on time.

Your credit score may change month-over-month, but normally will move slowly unless you have experienced a significant change in the way that you are using credit.  Therefore, if you see your credit score start to decline, or if you see your score increase significantly without a known reason for these changes, you should investigate.  It may be a lagging indicator that someone else is using your credit.  

[CLIENTS with CREDIT MONITORING, REPORTS AND SCORES]

The best way to manage your good credit standing and be alerted to identity theft is to review your credit reports and scores regularly, and watch for new activity on your credit report as it occurs. Luckily, <FINANCIAL_INSTITUTION>  is here to help. If you are an <EMBEDDED_ACCOUNT> account holder, you are entitled to activate proactive credit monitoring and receive email and/or SMS text alerts to new credit-related activity.  Plus, when you activate credit monitoring you are also able to easily access your credit report and credit score.  An easy-to-read graph will track your credit score over time so you can quickly notice significant changes.  

Even if you don’t have <EMBEDDED_ACCOUNT>, you are entitled, by law, to a copy of your credit report annually with each of the three credit reporting agencies. If a company takes adverse action, whether denying your application for credit, insurance, or employment, you are also entitled to a free report within 60 days of being notified of the action. Additionally, during the COVID-19 pandemic, you are entitled to a free copy of your credit report each week at www.annualcreditreport.com.

[CLIENTS without CREDIT MONITORING, REPORTS AND SCORES]

The best way to manage your good credit standing and be alerted to identity theft is to review your credit reports and scores regularly, and watch for new activity on your credit report.  You are entitled, by law, to a copy of your credit report annually with each of the three credit reporting agencies. If a company takes adverse action, whether denying your application for credit, insurance, or employment, you are also entitled to a free report within 60 days of being notified of the action. Additionally, during the COVID-19 pandemic, you are entitled to a free copy of your credit report each week at www.annualcreditreport.com. 

Identity Theft or Credit Reporting Errors?

Look for inconsistencies and errors on your credit report.  They may be innocent errors, but can still affect your credit score or your ability to use your credit in the future.  But these may also be additional indicators that someone else is using your identity.

• Personal Information is Not Accurate. Check to see if your name, address, birthdate and Social Security number (SSN) are correct. If your report contains inaccurate personal information, even if it partially correct, it could be an error or a sign that your identity has been stolen.

• Accounts that don’t belong to you. It’s possible that someone with a similar name could have an account accidentally listed on one of your reports. This could also mean that someone has stolen your identity and opened an account in your name.

• Incorrect account status. When reviewing your reports, make sure your account balance, account numbers and credit limits are accurate. Also, double-check that closed accounts aren’t reported as open.

• Expired debt. Negative remarks, such as collection accounts and late payments, typically remain on your credit reports for up to seven years. In most cases, the negative information automatically falls off of your credit report. If it doesn’t, this could mean the time clock on the debt was reset, which may be an error or a sign that someone is acting in your name.

If you think you are a victim of identity theft, don't worry.  We are here for you.  If you are an <EMBEDDED_ACCOUNT> account holder, you have access to a professional Identity Theft Recovery Advocate, who can help you dispute fraudulent credit activity to keep your credit and your identity YOURS!