Credit Building Tips

How to Repair Your Credit After Identity Theft and Fraud

Shaun Connell
April 10, 2023

According to the 2022 Identity Fraud Study conducted by Javelin Strategy & Reserve, 15 million consumers in the U.S. were victims of identity theft.

Identity theft isn't just scary and potentially expensive, but it can also wreak havoc on your credit for years to come if you aren't careful.

Solution iconRepairing your credit after identity theft can be a time-consuming process, but it's worth it to ensure that you don't suffer the consequences of bad credit down the road. You'll need to communicate with any creditors and companies where fraud occurred, dispute incorrect information on your credit reports, freeze your credit, and more to make sure that your credit isn't damaged by the experience.

As with most things, prevention is the best cure to identity theft when it comes to your finances and your credit. However, the next best thing is to regularly monitor your credit reports, credit card statements, and bank statements so you can catch strange or unusual activity right away.

What Is Identity Theft?

When someone uses your personal information without your permission, it's known as identity theft.

woman covering eyes representing dangers of id theft credit

An individual can use your personal information to commit identity theft in a number of different ways, including:

  • Getting a loan
  • Opening a credit card account
  • Renting apartments in your name
  • Getting medical services
  • Opening new utility accounts in your name
  • Changing your billing address
  • Using your debit card numbers to withdraw funds
  • Opening a bank account and writing bad checks
  • Obtaining a cellphone
  • Obtaining a new ID or driver's license

Obviously, any of these occurrences is a huge problem in their own right. When you add in the fact that it can have an impact on your credit reports and credit scores, it only adds insult to injury.

What to Do If You've Been a Victim of Identity Theft

Before we get into how to repair your credit after someone has stolen your identity, there are a few steps you're going to want to take to ensure that the fraudster isn't able to do any further damage.

There are essentially three different categories of actions you will want to take when someone has stolen your identity. These are:

  1. Informing federal and local authorities that you are a victim of identity theft
  2. Engaging the creditors, companies, and credit bureaus
  3. Taking action to ensure your identity won't be stolen in the future

This doesn't necessarily mean that you will want to go through these three stages in order, though. When you realize that your identity is stolen, you will essentially need to perform a number of important actions as quickly as possible to ensure that no further damage is done and that your personal and financial information is protected.

Here is a breakdown of the steps you'll want to take after you realize that your identity has been used for fraudulent purposes:

  • If you have identity theft insurance, file a claim: If you have identity theft insurance, your provider will be able to help you navigate the steps you need to take. It's possible that you have identity theft coverage through your employer or insurer without realizing it.
  • Contact any companies where you think fraud has occurred: Tell any companies that you believe might have been on the receiving end of the thief's fraudulent activities that you believe your identity has been compromised. If any loans or cards have been taken out in your name, close them.
  • Update your passwords: Even if you don't believe that your online accounts have been compromised digitally, it's a good idea to update your passwords and store them in a secure location. You'll also want to set up two-factor authentication using a reputable authenticator app.
  • File a report with the FTC: The Federal Trade Commission won't pursue criminal charges, but law enforcement agencies can use the information they compile in order to track down identity thieves. You can report identity theft to the FTC at
  • Contact your local police department: You also have the option to let your local police department know about identity theft. According to, doing so might be necessary if a creditor requires that you provide a police report, the thief used your name or information during a police interaction, or you personally know the identity thief.
  • Place a fraud alert on your credit reports: Now it's time to request a fraud alert be placed on your credit file with all three major credit bureaus - Equifax, Experian, and TransUnion. This will stay on your credit report for a year and inform any organizations that pull your report that it's possible your identity has been compromised.
  • Consider freezing your credit: Initiating a credit freeze will instruct the credit bureaus to refuse to share your credit report with any institutions that request it. It is free to freeze your credit, and you will need to initiate this action at all three bureaus. You can remove the freeze at any time.
  • Dispute any remaining fraudulent charges or accounts: If information is appearing on your credit reports or you're still on the hook for fraudulent charges, begin the dispute process.

In the next section, we will take a closer look at the steps that involve repairing your credit after identity theft and fraud.

How to Repair Your Credit After Identity Theft and Fraud

Now that you have seen a full list of the steps you will want to take after you realize that your identity was stolen let's take a closer look at the actions you'll need to take in order to repair your credit.

Understanding the Factors That Influence Your Credit Score (and How ID Theft Impacts Them)

Different credit scoring models vary slightly in how they weigh factors, but in general, they place a similar amount of importance on each type of information. The primary factors credit scores take into account(presented in order of importance) are:

  1. Payment history: Whether you've made late payments, on-time payments, defaulted on debts, have accounts in collection, or declared bankruptcy.
  2. Credit usage: The amount of available credit you are currently using with your revolving accounts, also known as your credit utilization rate. How much money you owe towards installment loans is also important but to a lesser extent than revolving credit accounts.
  3. Length of credit history: How many years have you been managing credit accounts?
  4. Types of accounts: Whether you have experience with different types of credit accounts.
  5. Recent activity: Whether you have hard inquiries on your report due to recent applications for new accounts.

If hard inquiries are impacting your credit score, this guide looks at how to remove hard inquiries from your credit report.

How Payment History is Affected by Identity Theft

If an identity thief steals your credit card information or opens fraudulent loans or cards, missed payments might be accruing. This could be happening on cards you opened yourself or accounts you don't even know about.

lock and credit cards representing online security to prevent identity theft and credit damage

The good news is that your liability is limited for paying back fraudulent purchases so long as you catch it quickly and report it right away, thanks to Federal law. The bad news is that your credit reports will show missed payments that have a negative impact on your score and how you appear to potential lenders as a borrower.

  • In order to repair your payment history, you'll need to dispute all of the marks on your credit report with both the creditor and the credit bureaus that are reporting the information.

Even if you file these disputes immediately after the fraud occurs, it can still take some time for the changes to reflect on your credit report and in your scores.

How Credit Usage is Affected by Identity Theft

If an identity thief racks up debt in your name, it will have a negative impact on your credit utilization rate. Experts typically recommend that you keep your credit utilization rate at 30% or under. Lower is always better.

  • When an ID thief uses your credit cards or takes out a loan in your name, it will lead to a higher credit utilization rate.
  • In order to fix your credit utilization rate, you'll want to dispute fraudulent charges with the creditor and the credit bureaus.

Once the problem has been remedied, your credit utilization rate will return to its normal level.

How Length of Credit History is Affected by Identity Theft

Though identity thieves likely won't have a direct impact on the length of your credit history, they can open new cards and get new loans that will wreak havoc on your credit score.

You will need to report the fraudulent activity to any lenders or creditors that allowed the thief to borrow money in your name and close the accounts. It can take time for the fraudulent accounts to be removed.

How Credit Mix is Affected by Identity Theft

Identity theft shouldn't have an impact on your credit mix, as it is unlikely that a fraudster will close your legitimate accounts. This is one of the few factors that you don't have to worry about, but, unfortunately, it is also one of the least impactful factors on your scores.

How Credit Inquiries are Affected by Identity Theft

If an identity thief has taken out a loan or opened a credit card in your name, it means that hard inquiries were made into your credit report.

  • Multiple hard inquiries at once can have a negative impact on your score and make potential lenders see you as a risky borrower.

Hard inquiries will remain on your credit reports even once you have closed fraudulent accounts and removed them from your credit report. You will need to dispute hard inquiries with the credit bureaus to ensure they don't impact your credit or your ability to borrow money in the future.

Identify All Fraudulent Purchase, Loans, Accounts, and Inquiries

You will want to take action quickly when you realize that your identity might have been stolen.

Here are the steps you'll need to take:

  1. Review your credit card and bank statements
  2. Request a free credit report from (this is the Federally authorized site for requesting your credit report)
  3. Review your credit report
  4. Check public records

On a mission to fix your credit? Take a look at our guides to removing a 30-day late payment, deleting a collection in exchange for payment, and removing derogatory marks on your credit report.

Review Your Credit Card and Bank Statements

If you suspect identity theft, take a look at both your credit card and bank statements.

On credit card statements, look for any unfamiliar charges. You don't want to ignore charges just because the amount is small-- many scammers will start with small charges to see if it works before making more expensive purchases.

Even if you don't suspect fraudulent activity, it's important to review your credit card statements regularly.

  • Many creditors have a 120-day window for chargebacks.

On your bank statements, keep an eye out for strange activity and contact your bank if there are any unusual charges you don't recognize.

Request a Free Credit Report is the site authorized by Federal law where you can request a free credit report from all three of the major credit bureaus.

Did your credit score drop unexpectedly? Take a look at this post about why your credit score might have dropped by 100 points or more.

Review Your Credit Report

Now that you have your credit report in hand, here is what you will want to look for:

  • Personal information that is incorrect
  • Accounts you never opened or co-signed for
  • Hard inquiries you don't recognize
  • Higher credit utilization rate than normal
  • Bankruptcies

It's best to follow up on any strange activity or marks on your credit report, even if it doesn't seem like a big deal or isn't currently impacting your credit score. If someone has your personal information, there's a good chance they will continue to do further damage.

Check Public Records

You'll also want to check public records for civil court judgments or liens in your name. An identity thief that stole your ID could be masquerading as you in a way that impacts your public record. Since civil court judgments and liens no longer appear on your credit report, you'll want to contact the recorder's office in your county to look at your public records.

  • If you find that bankruptcy or criminal activity has occurred in your name, you're going to want to file a police report.

Dispute the Fraud With All of Your Lenders and Credit Bureaus

There are a number of steps you'll need to take if there has been fraudulent activity in your name. Some of these were briefly touched upon in the section "What to Do If You've Been a Victim of Identity Theft."

First, you'll want to call any companies where the fraud has occurred. To stop further damage, ask credit card companies and lenders to close or freeze any and all fraudulent accounts.

You'll also want to ask for a letter confirming that:

  • The account in question isn't yours
  • All fraudulent charges have been removed
  • You aren't personally liable for purchases that have been made using the account
  • Both the account and any associated charges have been removed from your credit report

Beyond placing a fraud alert with all three credit bureaus, you'll also want to dispute any incorrect info that can be found on your credit report. All three credit bureaus-- TransUnion, Equifax, and Experian-- have online pages where you can begin the dispute process.

  • If you've started receiving any letters or communications from debt collectors, you'll want to respond within thirty days to tell them that the debt isn't yours and someone compromised your identity.

You'll also want to tell them to stop reporting the debt to credit bureaus and ask them for more details about the debt.

Take Steps to Further Protect Your Identity and Credit

Now that you've been through the process of dealing with identity theft, you're likely motivated to avoid this experience in the future. Once you have worked everything out with the credit card companies, lenders, credit bureaus, debt collectors, and any other involved parties, you'll want to make sure that you take any and all necessary steps to ensure your identity and credit are protected in the future.

For more info about how to protect yourself from ID theft, scroll down to the section entitled "How Can I Protect Myself From Identity Theft?"

Learning the Signs of Identity Theft

There are a number of things you will want to always keep an eye out for when it comes to identity theft and fraud.

  • Catching identity theft early can reduce the damage the party is able to do.

Some of the signs of identity theft can include:

  • Seeing charges on your credit card statements or bank statements that you don't think are yours
  • Receiving bills for items you didn't buy, medical services you didn't receive, or accounts you don't recognize
  • You stop receiving bills or other mail
  • You notice unexplainable withdrawals from your bank account
  • Receiving calls from collections agencies about a debt that isn't yours
  • Being notified that an account you don't recognize has been turned over to a debt collector
  • Receiving notification that more than one tax return has been filed using your name and information
  • Being denied credit due to the actions of the fraudster
  • Unexpected account statements
  • Letters or calls about a purchase you didn't make
  • Incorrect information on your credit reports
  • Being denied credit that you didn't apply for

Identity Theft and Credit FAQs

Before we sign off, let's touch upon some other frequently asked questions about identity theft and credit.

How Does Identity Theft Happen?

There are a number of different ways that identity thieves can steal personal information from individuals.

These include:

  • Retrieving information from discarded or lost mobile phones, computer equipment, PDAs, or wallets
  • Using malware or spyware to steal information from personal computers and devices
  • Skimming information from card readers to produce new cards
  • Stealing credit cards, checks, debit cards, driver's licenses, passports, or Social Security cards
  • Using rouge Radio-Frequency Identification readers
  • Disguising themselves as a reputable and trustworthy organization in order to obtain financial or personal information through email, mail, text messaging, or telephone
  • Stealing large amounts of personal information by hacking into computer networks and databases
  • Infiltrating organizations that enormous quantities of personal information
  • Finding documents that contain personal information like account numbers, credit card numbers, and Social Security numbers in trash cans or other locations

Do you need to repair your credit report so you are better able to qualify for a mortgage or another loan? Make sure you check out our articles about removing collections from your credit report, removing hard inquiries from your credit report, and removing evictions from your credit report.

How Can I Protect Myself From Identity Theft?

The thought of someone coming into possession of your personal information is truly terrifying. Luckily, there are a number of things you can do to prevent identity theft from occurring.

Here are some habits you can practice in order to avoid your private information ending up in the wrong hands:

  • Regularly monitor your bank statements and credit card accounts
  • Shred or destroy any documents that have personal information on them before throwing them away
  • Be skeptical of any phone calls or emails that pose as retail businesses, banks, or even people you personally know where you are being asked to provide personal or financial information.
  • Always use caution when sharing personal information or account numbers over the phone or online.
  • Use anti-virus software and password-protect all of your devices
  • Regularly review your credit report to ensure that it's accurate, and that there isn't any strange, unusual, or suspicious information
  • Always clear any and all personal information before selling, donating, or disposing of computers and other devices
  • Don't carry your Social Security card in your wallet. Instead, keep it in a secure location
  • Only give out your Social Security Number when it is necessary to do so
  • Create complex passwords for your devices and accounts, and change your password if there is a database breach at a company you do business with
  • Use a VPN if you are using public Wi-Fi.

Final Thoughts About Identity Theft and Credit Repair

Having your identity stolen can be an overwhelming and terrifying experience. With your personal or financial information, thieves have the ability to rack up debt, take out loans, or even masquerade as you in police interactions.

  • It's important, though, to resist the urge to bury your head in the sand if something like this happens to you-- the best thing you can do when you're the victim of identity theft is to take action quickly.

Are you on a mission to rebuild your credit and make sure that you always have the ability to borrow money and take out loans with the best terms? If so, make sure you check out our credit building blog.

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Written By:
Shaun Connell
Shaun Connell is a personal finance and credit expert with a passion for helping individuals eliminate debt and improve their credit. He's enjoyed writing investing and financial content for over 15 years, with expertise in real estate, debt, banking, credit, and wealth building. His work has been seen by millions on the web.

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