What is identity theft?
Identity theft occurs when your personal information like your social security number, credit card number or your date of birth is stolen in order to take financial advantage from them. It is one of the increasing crimes in US, where unauthorized credit accounts are opened in your name without your permission. As per the Federal Trade Commission estimates, over 9 million identities are stolen every year. The thief first uses your social security number and your date of birth to obtain a driving license in your name, but with changed address and photograph, by stating that he has changed his place of communication. The identity thief then uses this license to obtain a new loan in your name, open an account with the utility bill companies or to rent an apartment. Identity theft can result in damaging your good name and credit report. The damage in credit report will lower your credit score and you may end up paying higher interest rates on new lines of credit or losing an opportunity in getting a better job.
Ways by which the thieves steal your identity.
There are various ways by which your identity can be stolen. The thieves may steal your credit card information while you are making payments with these cards at a merchant establishment, by using a special device. They also steal mails from your mailbox or obtain old credit card bills from the trash, to get your information. They may even get information from your wallet or purse by stealing them.
Impact of identity theft on your credit score:
Once the thief has access to your personal information, they may use it in the following ways:
1) Open a new credit card account in your name and use these cards to make payments. Now, they do not pay back the credit card debts and become delinquent. This delinquency gets reflected in your credit report and lowers your credit score.
2) They may use your name to open a new utility account like electricity or telephone and then default on the payments, which again gets reflected in your credit report and lower your score.
3) They may also use your personal information like the social security number to get a job or get medical assistance.
How to prevent identity theft?
The most important instrument to fight identity theft is awareness and the knowledge of how to take action once you find your identity is stolen. The following measures can be taken to avoid being a victim of identity theft.
1) You should never throw away credit card or bank statement to the trash without cutting them into pieces.
2) You should never disclose any personal information like your social security number, credit card number or your bank account number to anybody. Identity thieves sometimes use a method known as phishing, where they ask for sensitive personal information like your username and passwords through emails. You should never reply to these emails.
Mostly a person learn that he has been a victim of identity theft after the damage has been done in his credit and the creditor calls him up for the debt which he has not incurred. However, to avoid being a victim of identity theft, it is always better to check your credit report at regular intervals and report any discrepancies to the credit bureaus immediately.
What to do if you realize that your identity is stolen?
If you feel your identity is stolen, you should immediately place a fraud alert service with the bureaus. This service if offered free of any cost. All you need to do is to call any of the three credit bureaus and place a fraud alert service. If you place fraud alert service with any of the bureaus, it will automatically be set with the other two bureaus. The initial fraud alert service remains active for a period of 90 days. Once fraud alert service gets activated, the creditors will need to call you up whenever there is a new credit application in your name and verify it before opening a new line of credit.
What to do if you find your identity is actually stolen and the thief has taken financial advantage from it?
If your identity has already been stolen and the thief has taken financial advantage from it, you should immediately file a complaint with the Federal Trade Commission through their online complaint form by visiting their website. On filling up the online complaint form, you will become a registered victim of identity theft. Now, you should call up the FTC at their hotline number 1-877-438-4338 and update the complaint. Next, you should visit the local police station with an identity proof, photograph and a copy of identity theft complaint form and file a complaint there. Finally, notify the creditor that you have been a victim of identity theft.