How to Repair Your Credit After Credit Card Fraud 

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In January 2017, Brian Shell returned to his home in Ann Arbor, Michigan, to discover it had been burglarized. To his horror, the safe where he stored his valuables were stolen.

In the safe was a Macy’s credit card. That same evening, the trio of thieves had put a glut of purchases on his Macy’s card while enjoying a shopping spree at the nearby mall.

Shell immediately canceled the card, but the damage had already been done. The over $1,000 in debt the thieves ran up on his card contributed to his credit score to dip from 800 to 700.

Shell had also recently left a regular source of income behind and because of that, he resorted to credit cards to get through his bills each month. This is what may have also contributed to the drop in his score. But the increased debt load from being a victim of identity theft made things worse. 

Unfortunately, Shell’s experience isn’t a unique one. According to the Federal Trade Commission (FTC), credit card fraud is the most common form of identity theft. And of the more than 1.1 million people who reported fraud, 21 percent lost more than $905 million. It certainly is a jaw-dropping statistic.

As you can see, credit card fraud can do serious damage to your credit. In this post, we discuss how credit card fraud can affect your credit, how to rebuild your credit, and what steps you can take to protect yourself once you’ve been a victim. 

How Identity Theft Affects Your Credit Score 

A common form of identity theft is a compromised existing account, explains John Heath, Directing Attorney at Lexington Law Firm. This can be a credit card, debit number or your banking information.

The thieves could get a hold of your credit card information by digging through a trash can and finding your credit card info on an old bill. Or they might be stealthy internet hackers, who obtain your information through an online security breach. 

“If a thief gets hold of your credit card information, they could easily run up your debt and harm your credit utilization, which accounts for 30 percent of your credit score,” says Heath.

What exactly is credit utilization? Credit utilization is the total balance on your cards against the max on all your cards total. It’s expressed as a percentage. And the higher your credit utilization ratio, the more harm to your score. In other words, the lower your credit utilization, the better your credit. 

And if a thief steals your credit card information and runs a hefty balance on it, your credit could be affected severely. 

Steps to Take to Repair Your Credit 

The Fair Credit Reporting Act states that fraudulent credit activities must be removed from your credit history, explains Heath. “First, you should check your credit report as soon as you can to immediately dispute any fraudulent activities,” he says.

While you can dispute fraudulent charges to the credit card company, it may take some for the charges to be taken off your account and your money refunded. And that high balance, while not something you were responsible for, stays on your credit history until the charges are removed. 

To prevent future instances of identity theft, put a credit freeze on your account. Doing so will prevent anyone from opening bank, credit card account, or applying for a loan in your name.

To put a freeze on your credit, contact each of the three major consumer credit bureaus—Experian, TransUnion, and Equifax. Depending on where you live, there is a fee from each bureau for the freeze. But if you’ve been a victim of identity theft, this fee can be waived. 

Don’t forget about the general best practices for boosting your credit. While you wait for fraudulent charges to be resolved, be sure to make on-time payments, and don’t run up your debt load with unnecessary purchases. 

Also, be consistent in paying off your balances.

“Consistency is what rebuilds a credit score,” says Shell, author of PassionHero.com. “It builds economic trust.”

You can also order a credit report. You’re eligible to get one free each year through each of the three major credit bureaus.

If your credit has sustained serious damage from identity theft, or you’re concerned about doing all you can to rebuild your credit, contact the team at Lexington Law. They can provide legal advice to help you fix your credit in the wake of identity theft.

4 Immediate Steps to Take to Protect Yourself from Identity Theft

If you’ve been a victim of identity theft or suspect that you have, take action to protect yourself: 

1. Keep your Social Security card in a safe place

You should never carry your Social Security card with you. Nor have it written down anywhere where an untrustworthy person may have access to it. And if you need to submit attach a form over email that includes your Social Security number, encrypt the document with a password. 

2. Change your passwords

This includes changing your passwords not only for your credit cards, but for your bank accounts, online retail accounts, and so forth.

Make sure your passwords are strong. You’ll want to use a combination of numbers, letters that are both upper- and lowercase, and symbols. It’s a good idea to update your passwords regularly, regardless of whether or not you’ve been a victim of identity theft. 

3. Sign up for credit monitoring

Although credit monitoring cannot protect you from identity theft, it can provide real-time alerts of suspicious activity. For instance, someone attempting to open an account in your name. 

4. Consider a credit repair service

Additionally, you may want to consider a paid credit report repair service. This service can provide continuous fraud alerts to protect your credit health.

While being a victim of credit card fraud is scary and overwhelming, you can reduce the damage done to your credit by taking the right steps. All it takes is a bit of knowledge and action. Over time, you’ll recover, and be in a better place to protect your personal information and financial accounts. 

What are the best ways you protect your identity?


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2 COMMENTS

2 responses to “How to Repair Your Credit After Credit Card Fraud ”

  1. Brad - Financial Life Planning says:

    My information was stolen a few years back. Thankfully they didn’t open any accounts in my name, but they attempted – two years in a row – to file false income tax returns with the IRS asking for huge refunds.

    I had to freeze my credit reporting (as mentioned above) and also set up a special PIN for future income tax filings.

    While it’s a hassle, I definitely got away from this better than many others.

    • Deacon says:

      Wow, that’s awful! That’s crazy that it happened two years in a row! I hope it never happens to you again! Thanks for your comments.

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