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Identity Theft Impact On Credit Score

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Identity theft can be defined as the intentional use of another person’s identity for personal benefit. The individual whose identity is abused will in most cases be held accountable of any wrongdoing committed and consequently be punished.

The most common instances of identity theft include unauthorized use of name or identity number to access certain privileged services and, use of credit cards usually without owners consent. It is as a result of identity theft incidences that financial institutions such as banks use your credit score to determine a person’s risks disclosure before advancing them credit.

Therefore, a credit score is simply a summary of a person’s credit history to determine their level of credit worthiness. Your credit worthiness determines whether you can be given credit at all and how much.

Effects of Identity Theft

Financial issues: an obvious result of identity theft is the loss of money. Here, a person can steal your identity and use it to withdraw money from your account resulting in loss of personal finances. In certain instances, the thief might acquire a credit card in your name and use it fraudulently to get you into unplanned debts.

Credit problems: you will definitely find yourself with credit problems due to misuse of credit cards. This is because a fraudster does not care about the effects of non-repayment of bills incurred from credit card usage. This automatically lowers your credit score.

Legal problems: we live in a world where crimes happen all the time. If a crime is committed using your identity, the law enforcement agencies will look for you if your identification documents are found at the scene of crime. And that results in legal challenges.
Precautionary Measures taken against Identity Theft

Get regular credit reports: make sure you visit your credit reference bureau regularly to familiarize yourself with your credit status. If you notice a suspicious entry in your report, you can report the matter to the authorities for an early intervention.

Keep secret your PIN and passwords: do not share your PIN with anyone. Most frauds happen as a result of social engineering. And most importantly, do not make your passwords as obvious as your birthday or marriage anniversary date. Those ones can easily be guessed by anybody keen on committing a fraud.

Remedies for Identity Theft

Use of the legal process: as a victim of identity theft, you are advised to file a case at the court of law so that you can be compensated for the loss you have suffered.

Mitigation of further loss: it is essential that you take reasonable steps in curbing incidences of identity theft. The starting point would be to work closely with the authorities and report the matter to the state anti-fraud unit. Also, you should suspend the affected account.

But most importantly, credit repair must be part of your end game. You will require a plan for making your name clean. And this plan will be the blueprint for clearing all debts associated with you thus improving your credit worthiness.

This article by John McConnell first appeared on Pyramid Credit Repair and was distributed by the Personal Finance Syndication Network.

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