Your identity was stolen. Not only are the criminals using your credit card, but they are also taking out more credit cards in your name using your Social Security Number. Every hard credit check is hurting your credit score. What do you do when your identity is stolen, and your credit is tanking? What happens when the fraudsters have your Social Security Number, and what happens when you try to get a new SSN? Let’s find out.
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The Difference Between Identity Theft and Credit Card Fraud
The best scenario is for just your credit card to be stolen, likely through one of the most common credit card frauds. At worst, the thief will attempt to max out your credit line, preventing you from making purchases, and possibly incurring overage charges. It’s important to note that credit card theft and identity theft are not the same. It is much easier to recognize unauthorized charges to your credit card account than to know when someone has your driver’s license or social security number. If you are diligent in paying your credit card bill and reviewing your statements, you should recognize fraud as soon as it happens, even if no one else has caught it.
In this case, you can dispute the charges to your account as soon as your realize you are a victim. The penalty for credit card fraud to your credit score is light; in fact, if caught early, there may be no penalty. Do note that businesses have 30 days to investigate a fraud claim. With the fraudulent purchases reversed and a fraud alert on your credit card, you can carry on as normal.
If you already recognized fraudulent charges on your account, there are immediate steps to take to protect your credit score and bank account, including contacting the three credit bureaus.
Identity Theft: What It Is, and How It Can Affect Your Credit Score
The worst-case scenario is discovering your Social Security Number was stolen. This is really the essence of identity theft, because your SSN is your key to the financial world. With your SSN in hand, the fraudster can open up any number of accounts, apply for loans, pay for medical bills, and more.
Imagine this scenario: A fraudster has obtained your SSN through hacking. With no qualms, they apply for 30 credit cards. Each one is maxed out as the fraudster goes on a spending spree. Worse, the fraudster has changed the mailing address for your bills, so the new cards are not discovered for a couple months.
How Identity Theft Can Ruin Your Credit
Each hard inquiry, made by each lender for individual credit cards, hurts your credit score. With the cards maxed out, your credit utilization ratio will be high, also penalizing your score. Plus, the payments on all of those cards is late, and all are tied to your SSN and credit score. A loss of 100 points on your credit is not unheard of.
The Federal Trade Commission has steps you can take immediately and in the long-term for when you discover identity theft.
Some important steps include instituting a credit freeze, which stops lenders from inquiring with the credit bureaus. It’s important to note that a credit freeze will not affect your credit score. You can also send dispute letters to the credit bureaus.
Fraud Alerts and Identity Protection
With proof of fraud, an extended fraud alert will be placed on your account for seven years, or until you lift the alert. Neither of these negatively affects your credit score. Both require lenders to take reasonable steps to verify your identity. With an extended alert, you get an additional free credit report on top of your yearly free report from each agency, and your name is taken off the prescreened name list, meaning no credit card offers in the mail.
If you only suspect fraud, you can put an initial fraud alert on your credit score, which requires lenders to notify you of their inquiries, and makes opening new accounts and loans harder overall. This lasts for 90 days. You can also opt out of prescreened offers for five years or permanently.
Credit Repair After Identity Theft
If just your credit or debit card is stolen, you likely won’t face any credit score consequences, unless you are left unable to make other payments on time. Identity theft, especially of your Social Security Number, can have serious ramifications. Even with a hit to your credit score, you can start rebuilding your score, including through using a credit card.
Once you have checked your credit report, be sure to report any mistakes that resulted from the identity theft. Otherwise, these mistakes can drag down your credit score — something you might not notice if you are only looking at your credit card bill. The longer identity thieves are able to use your information to borrow money or open credit card accounts, the more damage you will have to undo once you finally catch it. That can entail making separate correction requests to each credit bureau, and keeping a heap of documents organized to prove your innocence. This is why professional credit repair services are often used as part of an identity theft recovery.
Your SSN and Your Credit Score
Finally, and possibly most importantly, what do you do with your Social Security Number if your identity is stolen? We’ve already gone over how to add a fraud alert to your number, but what if you are suffering long-term problems, with new inquiries every so often? What if your SSN was distributed on the internet for fraudsters to use in opening up new accounts? When your credit card is stolen, you can order a new credit card, making the stolen information useless. f your SSN is truly compromised, it isn’t as easy to make the stolen information obsolete, and you may need to get a new SSN.
How to Get A New Social Security Number
You must meet certain parameters to change your SSN, as stated by the Social Security Administration.
“We can assign a different number only if:
- Sequential numbers assigned to members of the same family are causing problems;
- More than one person is assigned or using the same number;
- A victim of identity theft continues to be disadvantaged by using the original number;
- There is a situation of harassment, abuse or life endangerment; or
- An individual has religious or cultural objections to certain numbers or digits in the original number. (We require written documentation in support of the objection from a religious group with which the number holder has an established relationship.)”
Additionally, your old number is not erased. Instead, your new number is simply cross-referenced to the old one. At least, that’s the theory, anyway.
“Although the SSA claims to link a consumer’s old and new SSN, the reality isn’t that simple,” Lexington Law admits. “Information logged under your old number cannot be attributed to the new number, making it appear as though you have no credit history at all.” This means it isn’t a viable credit repair plan; it’s only helpful if your identity is stolen. Anything that requires a credit history will be tough to obtain in the immediate future after getting a new SSN. Consumer Reports recommends obtaining a letter from the SSA noting that your SSN changed. While the SSA will notify some government agencies, such the the IRS, and will inform your place of employment, it’s largely on you to make sure other organizations that need your SSN are updated.
Simply having your identity stolen does not mean you automatically qualify for a new SSN, however. The problems must be persistent; occurring multiple times in a year; and unfixable despite multiple attempts.
“If you have done all you can to fix the problems resulting from misuse of a Social Security number…and someone is still using it, Social Security may be able to assign a new number,” William Jarrett, SSA spokesperson, told the Daily Dot. “If you apply for a new number, you will need to prove your identity, age and U.S. citizenship or immigration status. You will also need to provide evidence you are having ongoing problems because of the misuse.”
Changing your identity is similar situation. You won’t receive a new birth certificate, and depending on your state’s laws, your old name could still be connected to your SSN and new name. Again, not a viable credit repair strategy.
Finally, for additional resources on identity theft, you may want to visit:
- Identity Theft Resource Center, which offers resources for victims
- Privacy Rights Clearinghouse, which can connect you to a network of other victims
- US Secret Service, who claim jurisdiction over financial fraud (though normally only cases with a substantial loss; contact your local field office)
- U.S. Department of Justice, and specifically the FBI, which investigates identity theft.
You can find more information about identity theft and your credit score at the Fiscal Tiger credit score resource center.
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