The reality of identity theft is that it can have an ongoing impact on your credit reports or scores, and it is a lot of work to clear your name. However, there should be no long term damage to your credit from identity theft. Short term effects can be losing more than 100 points from your score until all fraudulent credit information is removed from your credit report. This can take weeks, and sometimes even months.
The top four ways identity theft immediately impacts your credit are:
1. Higher Balances on Existing Accounts - In 2010, the fastest growing identity theft was the use or misuse of an existing credit account. If one does not monitor their account closely, a sudden increase in your balance will go unnoticed. Balances that are close to your credit limit have a significant impact on your scores. However, once the new charges are successfully disputed, your credit score should not be affected.
2. New Accounts – When your personal information is used to open a new account, that account will typically appear on your credit report. If one is open fraudulently, usually the account isn’t paid at all which will make matters worse.
3. Late Payments - Usually when a thief opens a fraudulent account, the consumer doesn’t know until the damage is already done. Due to this, the consumer’s credit score will often crash because no payments were made to the account, or sometimes, only a few payments are made and then they completely stop.
4. Inquiries - An inquiry is recorded on the consumer’s credit report when a scammer applies for credit using their personal information. Multiple inquiries usually don’t have a significant impact on someone’s credit scores, they will add up.
A good piece of advice would be to monitor your credit reports and investigate any suspicious activity immediately.