How Do You Rebuild Your Credit After An Identity Theft Incident?
The effects of identity theft are devastating — from dealing with creditors and disputing fraudulent charges to the emotional distress of having your most sensitive information used against you.
But once you’ve identified the warning signs of identity theft, it’s time to start undoing the damage. A critical part of that process is identity theft credit repair.
Your credit score affects everything from interest rates on credit cards to your ability to apply for mortgages and loans. It takes years to build up a high credit score. But an identity thief can destroy all your hard work.
So how do you repair your credit after identity theft? In this guide, we’ll break down the most important factors that impact your credit score (and how to rebuild your credit) if you are a victim of identity theft.
First: Secure Your Identity Immediately
Identity theft-related crime has skyrocketed during the pandemic. According to the Federal Trade Commission (FTC), cases of identity theft have increased 250% in the last year alone.
Even worse, 29% of identity theft victims are repeat victims [*].
Given the high chances of being a repeat victim, secure your identity by protecting yourself from future fraud.
What to do if you recognize that your identity has been stolen:
- Request a credit freeze with the three credit bureaus — Experian, TransUnion, and Equifax — to stop any further damage from fraud.
- Update your passwords to be more secure. Use a secure password manager to keep track of your new passwords and set up 2FA using an authenticator app (not SMS).
- Notify your bank and any impacted lenders and companies of the fraud. This will help limit your liability to financial fraud.
- Report the fraud on IdentityTheft.gov. Repairing your credit will require an official identity theft report.
- File a police report with local law enforcement. Along with your FTC affidavit, a report from your local police department may be required to claim damages.
- Set up credit monitoring to automatically alert you of any suspicious activity or new accounts opened in your name.
Zoom out: Identity Guard's Total plan monitors all your sensitive information - including credit accounts, credit score updates, bank accounts and alerts you of suspicious activity. Every account is also covered by a $1M insurance policy for eligible losses related to identity theft incidents.
🎯 Related: 11 Steps To Take Immediately If Your Identity Has Been Stolen →
How To Fix Your Credit Score After Identity Theft
- Understand the biggest factors that impact your credit score
- Identify all fraudulent accounts, loans, purchases, and inquiries
- Dispute the financial fraud with all your credit lenders
- Protect yourself from future identity theft and fraud
Understand The 5 Factors That Impact Your Credit Score
- Payment history: 35%
- Debt level/Credit utilization: 30%
- Length of credit history: 15%
- Credit inquiries/New credit: 10%
- Credit mix: 10%
Lenders use different scoring models to determine your credit score. But the most popular credit scoring models are developed by FICO® and VantageScore®.
Watch: Dave Ramsey explains how to rebuild your credit score →
Here’s our step-by-step guide to your identity theft credit repair for each factor:
1. Payment History
Payment history is the most heavily weighted factor and accounts for 35% of your overall credit score.
Your credit payment history is determined by your ability to make payments on time to your open lines of credit. If you miss payments, it can cause damage. Payments that are 30+ days past due could cause your credit score to drop by 100 points or more [*].
How is payment history affected by identity theft?
Identity thieves will open fraudulent loans, steal your credit card and bank account numbers, and commit financial fraud with no intention of making payments.
If you have a lot of credit cards riddled with fraudulent activity, missed payments can accrue across all of them, creating a logistical nightmare to resolve.
Luckily, federal law limits your liability for paying back fraudulent purchases (if you catch the fraud quickly and report it). But unfortunately, your credit score will still show multiple “missed payments” that can quickly tank your score.
How to repair your payment history
To repair your payment history, you’ll need to dispute all fraudulent transactions on your credit score. The sooner you catch and report these issues, the better.
If credit card fraud is caught immediately (between 1 to 7 days after the fraudulent charges are made) and reported right away, it will still be several weeks before the removal of the fraudulent charges is reflected on your credit report.
🎯 Related: What Is a Credit Freeze? Can It Protect You From Fraud? →
2. Credit Utilization
Your debt level is the second biggest factor that determines your credit score, accounting for 30%. Your debt level is calculated using a couple data points:
- Overall debt. This is how much debt you carry across your accounts.
- Credit utilization. This refers to the ratio of what you’ve paid on an account versus the original balance. For example, if you have a credit card with a limit of $1000 and you’ve used $500, you have a credit utilization of 50%.
Your credit utilization is the most important part of your debt level. To have a positive impact on your credit score, you should try to keep your credit utilization at 30% or under [*].
How is credit utilization affected by identity theft?
Identity thieves want to steal as much of your credit as possible. They’ll max out credit cards and run up debt quickly, and you may not realize this until it's too late.
High balances, whether fraudulent or not, lead to higher credit utilization. If you go way over the recommended 30%, your overall credit score will decrease.
Identity thieves are concerned about getting caught, which means they'll be running up credit balances as quickly as possible.
🎯 Related: How Did Someone Get My Credit Card Number? →
How to rebuild your credit utilization
Luckily, credit utilization changes quickly. When the fraudulent charges are disputed and removed from your credit report, your credit utilization returns to normal levels.
With enough time, your score should bounce back to what you’re used to seeing.
3. Length of Credit History
The length of your credit history is the third most-important factor in determining your credit score and accounts for 15% of your overall score [*].
Your credit history (or credit age) includes both the age of your oldest credit account and the overall age of all your accounts. Lenders want to see that you have experience paying back debt and don’t constantly open and close new accounts.
How is length of credit history affected by identity theft?
Along with opening new credit cards, an identity thief will often commit loan fraud by opening new loans in your name. Unfortunately, opening multiple new lines of credit all at once will negatively impact your credit score.
How to rebuild your credit history
Like with the other factors that impact your credit score, your credit score will recover when the fraudulent accounts are removed. However, it can take time to contact all impacted lenders and get them to close your accounts.
4. Credit Inquiries
About 10% of your credit score is made up of the number of credit inquiries on your credit report.
There are two types of credit inquiries you should be aware of:
- Hard credit inquiries are when you apply for a new line of credit, finance a car or home, or rent an apartment. These inquiries affect your credit score for 12 months and don’t entirely disappear for 24 months.
- Soft credit inquiries are when you check your own credit score. These inquiries don’t impact your credit score.
Having one or two credit inquiries on your report at a time won’t impact your credit score too much. But the more credit inquiries that happen at once, the more it could harm your overall score.
🎯 Related: Buying a New Vehicle? Avoid These Common Car-Buying Scams →
How are credit inquiries affected by identity theft?
If an identity thief has stolen enough information to open a credit card or take out a loan in your name, there’s a strong chance they'll try to do more.
As criminals commit financial fraud, your credit score gets hit with multiple hard inquiries at once, which can do serious damage.
How to repair your credit inquiries
If you notice fraudulent accounts open in your name, you should take immediate action to shut them down. Unfortunately, once the fraudulent accounts have been removed from your credit report, the hard credit inquiries will still be there.
To remove hard credit inquiries from your credit report, you need to dispute them with the credit bureaus.
5. Credit Mix
The last factor in your credit score rating is the mix of credit in your name, which accounts for another 10% [*].
Credit mix looks at the types of credit you have open – revolving accounts (like credit cards and HELOCs) and installment accounts (like a mortgage or student loan).
Creditors want to see that you have experience paying off both types of debt, and a good mix of the two will help your improve your credit score.
How is your credit mix affected by identity theft?
Luckily, credit mix is one of the few factors in your credit score that isn’t damaged by identity theft. By the time you shut down any fraudulent credit cards or even mortgages, they shouldn’t factor into your overall score.
Identify Fraudulent Accounts, Loans, and Inquiries
- Review your credit card statements
- Review your bank statements
- Get a free credit report at AnnualCreditReport.com
- Review your credit report for signs of identity theft
- Check public records for liens or civil court judgments
1. Review your credit card statements
Start with your credit card statements. Look for unfamiliar charges. Some vendors use different billing names than you’re familiar with. If you’re unsure, do a quick Google search of the name to see who it is.
Don’t ignore small purchases, either. Hackers use a scam called carding where they steal your credit card information and then make small charges against it to verify it works. Once it does, they’ll move onto larger purchases.
Many credit card companies have a maximum 120-day limit for chargebacks. So it’s important that you review your statements regularly.
Better yet, try credit monitoring which can help streamline all of this for you. Finally, make a list of any impacted vendor or company as you’ll need to report the fraud.
2. Review your bank statements
Identity thieves can also commit bank fraud and open new accounts in your name. Check your accounts for strange activity or contact your bank and ask about recent transactions.
3. Get a free annual credit report
Your credit report is the main place where you’ll be able to identify fraudulent activity.
You can get a free credit report from all three credit bureaus — Equifax, Experian, and TransUnion — at AnnualCreditReport.com.
Or, use a credit monitoring service to regularly review and alert you of suspicious new accounts or spending.
4. Check your credit report for signs of identity theft:
- Incorrect personal information. A wrong address or misspelled name on your credit report can be signs of identity theft that will need to be corrected.
- Hard credit inquiries you don’t recognize. Look for unknown inquiries, especially loan and credit card applications. Make note of each affected lender.
- Accounts you never opened. Only your personal accounts (and ones you’ve cosigned for) should appear on your credit report. Add any unexpected accounts to your list.
- Higher credit utilization than you expected. If your debt owing has shot up, look for the source. It could be fraud. The same goes for dramatic changes to your overall score.
- Bankruptcies. Personal bankruptcies are the only public record included on your credit report. Sometimes, a fraudster will go so far as to file for bankruptcy in your name in order to cover their tracks. This can seriously damage your credit score.
5. Check public records for liens or civil court judgments
Negative information and public records can impact your creditworthiness and be another mess you need to clean up to repair your credit after identity theft. Criminals may steal your identity with your ID and use it if they’re arrested or taken to court.
Liens and civil court judgments are no longer kept on your credit report. You’ll have to contact your county recorder's office.
🎯 Related: Is Discover Identity Theft Protection Worth It? →
Dispute Credit Fraud With Your Lenders
- Call any affected companies where fraud has occurred
- Contact your credit card company
- Place a fraud alert with all three credit bureaus
- Dispute incorrect information on your credit report
- Close any other new accounts opened in your name
- Stop debt collection agencies from contacting you
- Fix any records of criminal activity or bankruptcy
1. Call any affected companies where fraud has occurred
Call the fraud department of any company where a criminal used your financial information to commit fraud. Explain that someone stole your identity and supply a proof of identity and your ID theft affidavit.
Ask them to close or freeze the fraudulent accounts to stop further damage. You’ll also want to ask them to send a letter confirming that:
- The account isn’t yours.
- You’re not liable for any purchases made using the account.
- They’ve removed fraudulent charges from your account.
- The account and charges were removed from your credit report.
You may be asked to supply your identity theft report or fill out a special form. Keep all of these in case the charges still show up on your credit report.
Pro tip: If you have online accounts with any of these businesses, you’ll also want to update logins, passwords, and PINs.
2. Contact your credit card company and cancel all affected cards
Call the number on the back of your credit card and ask to speak to your credit card’s fraud department. This starts the fraud reporting process with them and also limits your liability for any charges.
Important: You'll need to replace any credit cards where fraud has occurred.
Here are the numbers you can call for some of the major credit card issuers in the United States if you suspect fraud:
- Visa: 1-800-847-2911
- MasterCard: 1-800-627–8372 (1-800-MASTERCARD)
- Chase: 1-800-432-3117
- Capital One: 1-800-227-4825 (1-800-CAPITAL)
- Citibank: 1-800-950-5114
- Bank of America: 1-800-732-9194
- Discover: 1-800-347-2683 (1-800-DISCOVER)
- American Express: 1-800-528-4800
🎯 Related: How To Spot a Citibank Phishing Email (With Examples) →
3. Place a fraud alert with all three credit bureaus
Next, notify the three reporting credit bureaus of the fraud and initiate a fraud alert.
This lasts one year and forces lenders to take extra steps to verify your identity before opening new credit accounts.
You only need to contact one credit bureau to place a credit freeze (they must alert the other two).
- To place a credit freeze with Equifax, click here or call 1-800-349-9960.
- To place a credit freeze with Experian, click here or call 1-888-397-3742.
- To place a credit freeze with TransUnion, click here or call 1-888-909-8872.
4. Dispute incorrect information on your credit report
Next, you’ll want to dispute any incorrect information and fraudulent activity on your credit report, such as unrecognized accounts and hard inquiries.
As a victim of identity theft, you have the right to remove fraudulent information from your credit report. This is called credit blocking and it stops companies from trying to collect fraudulent debt from you.
Write to each of the three credit bureaus explaining the situation, which information on your report is fraudulent, and what you’d like blocked.
Use the Fair Credit Reporting Act (FCRA) compliant credit bureau dispute letter. This requires the bureaus to act within 30 days of receiving it. The FTC has a template credit dispute letter you can use.
You’ll need your Identity Theft Affidavit from the FTC as well as proof of your identity, like a driver's license.
Here’s where to mail each letter:
- TransUnion — Fraud Victim Assistance Department P.O. Box 2000 Chester, PA 19022.
- Equifax — P.O. Box 105069 Atlanta, GA 30348.
- Experian — P.O. Box 9554 Allen, TX 75013.
5. Close any other new accounts opened in your name
If you think a criminal has opened checking accounts or taken out student loans or unemployment benefits in your name, you’ll need to dispute those as well.
For fraudulent checking accounts, order a free copy of your ChexSystems report by calling 1-800-428-9623.
Contact any institution where you have an account in your name that you didn’t open and ask them to close those accounts.
If someone is writing bad checks against your bank account, contact your bank and ask them to initiate a stop payment and close the account.
You can also ask them to report the theft to their check verification system, which will stop businesses from accepting them.
Then, be sure to contact any business that took a bad check and explain that someone stole your identity. Act fast before they send the debt to collections.
For loans, benefits, or even misuse of your Social Security number, contact the affected business and explain the situation:
- Student loans: Contact the school or program and ask them to close the loan and send you a letter saying you’re not responsible for the debt.
- Unemployment or other government benefits: Contact the affected agency and explain the situation.
- SSN: Contact the Social Security Administration (SSA) and explain that your number has been used for identity theft and fraud.
🎯 Related: What Is Check Washing? How Can You Protect Yourself? →
6. Stop debt collection agencies from contacting you
If you’re receiving letters from debt collectors about fraudulent accounts, write to them within 30 days and tell them:
- Someone stole your identity.
- That you don’t owe the debt.
- To stop reporting the debt to credit bureaus.
- To send information about the debt (businesses that extend credit are required to send you details like a copy of the application and the applicant’s signature if you ask).
The FTC has a good template you can use for contacting debt agencies on their website.
7. Fix any records of criminal activity or bankruptcy
If the identity thief has used your information to commit crimes or file for bankruptcy, you’ll need to file a police report.
Should You Use a Credit Repair Service?
Credit repair companies claim they will help you rebuild your credit score by disputing outdated and incorrect information on your reports.
The truth is - you can do this yourself! You don't need to pay someone to rebuild your credit for you.
Plus, the credit repair industry is full of scammers looking to get access to your personal information. Even Dave Ramsey says most credit repair services are a scam.
A better option could be to sign up for an identity theft protection service.
IdentityGuard and Aura are two of the highest-rated identity theft protection services available. Both come with $1 million insurance policies for eligible losses due to identity theft.
Some plans also include White-Glove Remediation support where a dedicated and experienced agent will guide you through the process of repairing the damage of identity theft and fraud.
🎯 Related: Do Credit Repair Companies Work? What You Need To Know →
Protect Your Identity and Credit
Knowing the basics of identity theft is a good start, but it's not enough.
The most important thing you can do to repair your credit after identity theft is dispute the fraud with credit bureaus and lenders, immediately.
You must contact all affected companies, credit lenders, and bank accounts and reverse fraudulent charges in your name.
As long as you dispute the fraud in a timely manner, your credit score should recover.
Identity theft can destroy your credit and stop you from buying a home, renting an apartment, or leasing a car. Don’t ignore your credit score until it’s too late.
