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How Identity Theft Impacts Your Credit Score

Jackie here. Most people are aware that identity theft can impact the credit of a victim by lowering their credit score and making it harder for people to get legitimate lines of credit. Let’s take an in-depth look at exactly how (and by how much) ID theft can impact your credit score. We found a great article from MSN Money that hits the key points—let’s take a look at some of them.

How does identity theft impact credit? Find out below:

Higher Debt to Credit Ratio

The amount you utilize your credit can have an impact on your score. For example if you have a $1,000 credit card and have charged $999, this is considered high credit utilization which can have a negative impact on your credit. Since ID theft may add new charges to your existing accounts it can increase the amount you have borrowed, leading to a higher debt to credit ratio.

Impact on your credit score: up to 45 points

New Accounts

Identity thieves may also your information to open new accounts, often with large balances that are never paid. This can have a huge impact on your credit, especially if you didn’t have any previous late payments listed on your report.

Impact on your credit score: up to 100 points

Inquiries

Businesses typically examine your credit during the credit application process. This typically only has a minor impact on your credit, but if done many times because of ID theft, this impact can add up. What’s more, many people often don’t think about cleaning up the inquiries after they remove fraudulent charges from their accounts, but this step is necessary as well. Inquiries can be more problematic for those with few credit accounts.

Impact on your credit score: variable

While ID theft can cause problems with your credit report, they are fixable. It will take time, but with diligent effort you can restore your credit after identity theft.

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