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How ID Theft Can Turn Your Good Credit Into Bad Credit!

ID theft protectionRecent ID theft numbers are quite alarming (as of November, 2012): 7% of US households reported some type of identity fraud which means that close to 9 million Americans have their identities stolen every single year.

One of the biggest downsides of being a victim of ID theft is how your credit rating could change from good credit to bad credit. This is because the ID thief could rack up purchases and debts at your expense.

Even if you take great care of your credit history, once the ID theft effects set in, your credit rating could plummet, giving your credit report a major black mark.

The reason for this is that as the thief’s purchases and defaults mount, and will appear on YOUR credit accounts, not his. Thus, he gets a free ride, while YOU suffer for it. 

Helpful Identity Theft Protection Tips

1. Order Your Credit Report Annually

Bad credit with ID theft can be nipped in the bud, if you make it a point to regularly check your credit via credit monitoring. As soon as you detect ID theft, work on notifying the three credit bureaus: Trans Union, Experian and Equifax.

The moment you do, there will be a fraud alert attached to your file, and you may then be able to dispute the fraudulent transactions made on your account. Some people actually end up dealing with effects of ID theft for years, but do take heart that after 6 years, items on your report do clear up.

Tales of lives devastated by ID theft abound, and the theme is the same: it isn’t easy to clear up the havoc that ID theft can wreak, but ultimately, once you are in the clear, all the efforts would have been worth it.

2. Identity Theft and Its Damage on Credit Report

bad credit

In “Stolen: True tales of identity theft” by Allie Johnson, there is a case of a man whose credit details were sold to another person on the black market. 

The result was dramatic: the thief was arrested and charged, and Bogdan Vovk, the victim, was cleared of all the transactions, except for a $4,000 transaction made at a furniture rental store.

Bogdan Vovk first realized that he could be the victim of ID theft when a jewelery store sent him a card with a thank-you note for a Rolex purchase. Since that time, he spent 160 hours or 6 days and 16 hours with all the creditors that the thief transacted with.

While he eventually cleared his credit report, he was left with a credit score in the line of 500s, down from a score of 780.

3. How to Boost Your Credit Score After ID Theft

After swinging from good credit to bad credit – no thanks to an ID thief – what you could do  - after disputing all the transactions he’s made – would be to work on boosting your credit score.

While all the reversed transactions would restore your credit report, some creditors may still refuse to reverse those transactions.

This means that as long as these transactions remain on your report, if these transactions affect your credit score, you will remain in a bad credit category.

Thus, even as you dispute all the activities done by the thief, you can still work on regaining your credit score by making transactions using your existing accounts and paying them promptly.

This would work to boost your credit score, even as you are working on repairing the damaging effects of the ID theft. Make sure that the accounts you are using are all accounts that the thief has not been able to get his hands on, so that you won’t do your credit report any more damage than what has already been done.

Moving forward always be wary of the possibility of identity theft. Now that you know that bad credit as a result of id theft can definitely happen, work on 

Practicing These Credit Score Protecting Habits

1. Never Leave Credit Card and Bank Offers in Your Mailbox.

Work on a mail-gathering routine that will help you regularly “harvest” your mail once a day.

id theft protection

While P.O. Boxes may seem safer, the fact that it is not under your control, as well as it is located in a space that’s not yours heightens the risk and possibility of theft. If you can find a mail storage or forwarding service in your area, especially one that’s reputed to keep mail safe, that may be a better option than a P.O. Box or your own mailbox.

If a mail storage service is not feasible, try putting your mailbox in a secure place. You may try placing your mailbox within the fence, but where your mailman can still reach it, or you may even try installing a CCTV camera to monitor the people who come and go to get your mail.

It will not prevent mail theft, but it will certainly make it easier to catch the mail and possibly future identity thief.

2. Never Give Out Your Credit Details or SSN to Other People

Another case in the article by Allie Johnson (See “Stolen: True tales of identity theft”) tells the story of a man whose ex-GF stole his credit details and abused them. In short, it was his ex who became his ID thief. Learn from this lesson and be wary of friends, family and even lovers.

You must be painfully aware of the difference between bad vs good credit by now. Thanks to this, we’re sure you will be protecting your credit standing with all that you are and all that you have. Never let bad credit from ID theft happen to you. Follow our tips, and they will help safeguard your credit score and credit report.

What are your tips on how to protect your identity and avoid id theft? Please share your thoughts with us!

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4 Responses to “How ID Theft Can Turn Your Good Credit Into Bad Credit!”

  1. Mark Says:

    ID Theft is a big problem these days and should not be taken lightly. My friend’s ID was compromised once and I remember it took him forever to get his credit fixed.

  2. Elena Says:

    You are absolutely right Mark. Everyone should do everything to prevent identity theft – there are a too many consequences that come with it. Thanks for your feedback!

  3. Steve Says:

    There is a lot of great information here. I’ve heard of some thieves sending out emails to phish for information. They dress the email up to look like they came from a bank. They try to get you to click through to a fake website where you’re asked for your login information. Anyone who puts it in just gives it to the thief. I think just being careful about who and where you give your online information to would be a good idea.
    Steve recently posted..How to Risk More, Fear Less and Gain EverythingMy Profile

  4. Elena Says:

    That is very true. I get a lot of those from Paypal and other bank sites. But if you take a closer look at their email addresses – it’s always slightly different (sometimes just by one letter) than the original version. All they want you to do is put your log in information in one of those emails to get to your account. Great insight Steve! Thanks for coming back and commenting again!

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