How identity theft can affect your credit score

Online scams, including identity theft, are some of the most common ways Australians experience financial scams each year.

If you’ve been targeted by identity theft, it’s important to know how it may affect your credit score, and what you can do to repair any damage done.

How identity theft may impact your credit score

Identity theft is when a criminal steals your personal information, such as your name, birth date, driver’s license number, passport number etc.

By using this information, criminals can apply for financial products and/or request funds be withdrawn on your behalf. This includes applying for credit cards, personal loans, phone plans and even passports under your name. This is where identity theft can begin to adversely affect your credit history and credit score.

According to credit reporting bureau, Equifax, some of the ways a criminal can use your personal information includes:

1. Opening new credit card accounts in your name. When the thief makes purchases on the credit cards and leaves the bills unpaid, the negative information can be reported to your credit report and could impact your credit score and your ability to get credit in the future.
2. Opening a bank account in your name or create fake debit cards and use them to drain your existing bank accounts.
3. Setting up a phone, wireless internet, or other utility service in your name.
4. Trying to get a copy of your Equifax Credit Report.

Essentially, any adverse financial events that the criminal does under your name may show up under your credit history and damage your credit score

What to do if you discover errors on your credit report

Oftentimes identity theft is only detected after someone has taken out financial products under your name, which means that these events may already be on your credit report.

The good news is that these events aren’t a life sentence. Credit reporting bureaus, such as Equifax and Experian, are prepared to act, assess, and remove incorrect information on your report.

While the process to fix this may be lengthy, it is well worth it.

Firstly, if you believe you may be the subject of identity theft it’s best to contact the police and report the crime. Then, to protect your credit history, you’ll want to request a copy of your credit report to check what information is or isn’t correct. You can also have the option of freezing your credit report for 21 days, which essentially stops any new inquiries on your credit report.

With this information, you’ll want to contact the credit providers immediately and inform them that this crime has occurred, and the credit product has been applied for illegally. The provider should take immediate action in closing said accounts and generally retrieving any stolen funds

After you’ve informed the credit providers, reach out to Australian credit bureaus. Inform them that this crime has occurred and list the information you believe is incorrect on your credit report. The credit bureau will be able to investigate these errors to remove them and repair your credit score, as well as put a pause on any new credit information being added to your report by the criminal

Equifax also recommends keeping records of any conversations throughout this process, including:

• Names of the individuals
• Contact numbers
• Date you spoke to an organisation
• Details of the conversation

This may be prudent for legal reasons, particularly if the case is taken to court. But can also be valuable in assisting the credit providers and credit bureaus in investigating the removal of the false information.