How Identity Theft Affects Your Credit Score
Updated: Apr 20
Identity is important! It lets others get a quick glimpse of your reputation and the very essence of who we are.
Much like your physical identify, your credit identity is the same. It’s the essence of who you are as a buyer.
Industries use your credit identity to determine your buying power. This is just as hard to build and maintain as your physical identity.
So, when someone steals your credit identity, although it may be a subtle takeover, it hurts.

If this has happened to you, here are some things you need to think about
How does identity theft affect your credit?
How can you recover from identity theft?
And, prevent it from happening again.
The Effects of Identity Theft
Identity theft is a pain, the first hit you’ll take is to your credit score.
There are 5 factors that go into building your credit. When identity theft happens it affects each one of these factors in a unique way.
Here’s how………..
Payment History - 35% of your credit factor
Identity theft affects the payment history factor on your credit score severely, because most criminals aren't going to pay your bills.
In fact ,they'll open accounts in your name and leave a trail of creditors calling you to pay them back.
It works for them because none of the bills are not in their name, they get all the perks and none of the responsibility.
You're stuck with the missed payments and because payment history is such a large factor, a missed payment could drop your score up to 30 points.
That's just one account were talking about. Imagine if it were more than one account they stole.
You do the math!
Credit Utilization - 30 % of your factor
If the thief has gotten a hold of the cards you already have, your still in a tough spot. They'll purchase things on your current account until you have nothing left, causing your balances to rise.
Credit utilization is the second largest factor on your credit score.
The funny thing about your credit is, creditors want you to have it, but don’t want you to need it.
When you have high balances it shows you're struggling and you don’t have a lot of cash assets.
High credit utilization is a no, no! This could also drop you credit 30 to 40 points.
Credit Length- 15 % of your factor
Along with your payment history factor, your length of credit factor will be gravely affected. Too many new lines of credit is a red flag that'll cause your credit score to take a dive.
Most criminals will try to get all they can in your name in the least amount of time, this may lessen their chances of getting caught.
They'll open as many lines of credit in your name as possible, leaving you with a ton of accounts less than two years old and that’s definitely not a good look.
This could cause your credit to take a 10 to 20 point dive.
Inquiries - 10% of your factor
With each new line of credit, comes a hard inquiry. Too many hard inquiries on your account means too many fresh accounts.
Again, this means you're not handling your borrowing power responsibly. Creditors want to know you've not gone power hungry, opening lines of credit all over the place.
When criminals do this, they can cause your score to drop 10 to 15 points per hard inquiry. Ouch!
Credit Types - 10% of your factor
This factor, fortunately, is the least affected. It’s actually a good thing to have a mix of credit on your credit report.
But, when they’re not yours it can be stressful.
So, what can you do if identity theft happens to you?
What can I do if I was affected by Identity theft?
If you’ve been victim to identity theft, here are 8 things you need to do immediately:
1. Get on the phone with the credit bureaus to freeze your accounts.
Each credit bureau has a freeze account department. Just click below:
Equifax or call 1-866-478-0027
Transunion or call 1-888-909-8872
Experian or call 1-888-397-3742
2. Change your passwords.
3. Close all new accounts opened.
4. Report the fraud on IdentityTheft.gov.
Repairing your credit will require an official identity theft report.
5. File a police report.
6. Dispute the fraudulent information.
I have already written a guide on how to do this and a free dispute template letter.
You'll need your fraud report from Identity Theft.gov and your police report on hand along with your driver’s license.
7. Stop debt agencies from calling you.
8. Start monitoring your credit with apps like Credit Karma.
If you’ve been hit by identity theft and you
don’t want to do it alone, try using a credit repair
company like Credit Nerd.
How can I raise my credit score after identity theft?
Once you’ve taken care of all the above tasks, it’s time to start repairing the damage.
To do this, think about all the factors that make up your credit score and tackle each one at a time.
Or, honestly, this one step could remedy all your problems:
Dispute the fraudulent activity
How? Well, this one step could cause,
Negative payment history remarks to disappear.
Credit utilization to go down because the charges to your card will be reversed.
Hard inquiries made by opening new lines of credit will disappear.
How to check for Identity theft?
Once you’ve been hit by identity theft, you are always on high alert. But who needs that added stress in their life.
Follow these few steps to make things easy, they'll also help you prevent identity theft if your never been affected:
Monitor your accounts, that includes, bank statements, credit card statements, at least once a month
Quick and Easy Tip: If you sign up for online banking, this'll help you monitor your bank and credit card statements from your phone.
Monitor your credit score
You only get one free credit report a year but a credit monitoring app will give you what you need to monitor your credit score in the meantime. You can do this daily.
Invest in an identity protection plan
Most credit bureau sites offer identity theft protection.
Major Take Away
Technology like anything else has its pros and cons.
Its made it easy for criminals to commit identity theft, but has also made it easy for you to catch it and fix it.
To protect yourself from fraud, be more proactive when it comes to checking your credit score.
Create a plan to check it at least twice a month, so if you do become a victim of identity theft, you can catch it early and act quickly.