Last Updated on September 6, 2020 by SCARS Editorial Team

SCARSSCARS SCARS - Society of Citizens Against Relationship Scams Inc. A government registered crime victims' assistance & crime prevention nonprofit organization based in Miami, Florida, U.S.A. SCARS supports the victims of scams worldwide and through its partners in more than 60 countries around the world. Incorporated in 2015, its team has 30 years of continuous experience educating and supporting scam victims. Visit www.AgainstScams.org to learn more about SCARS.™ Special Report: Does Being A ScamScam A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost. Victim Affect Your Credit Score?

ScamsScams A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost. Involving Identity TheftIdentity Theft Identity theft is when someone uses another person's personal identifying information, without their permission, to commit fraud or other crimes. In both the U.K. and the United States it is the theft of personally identifiable information. Identity theft deliberately uses someone else's identity as a method to gain financial advantages or obtain credit and other benefits, and perhaps to cause other person's loss. The person whose identity has been stolen may suffer adverse consequences, especially if they are falsely held responsible for the perpetrator's actions. Personally identifiable information generally includes a person's name, date of birth, social security number, driver's license number, bank account or credit card numbers, PINs, electronic signatures, fingerprints, passwords, or any other information that can be used to access a person's financial resources. Can Hamper Your Ability To Get Loans, But You Can Reduce Long-Term Impact

The following reflects the opinion of the author and is not intended to replace professional financial advice. If you have been the victim of a financial crime you are advised to seek the advice of a financial professional, and in many cases an attorney as well.

How Identity Theft Affects Your Credit Score

Identity theft can unfairly hamper its victims’ ability to get credit and loans – on top of other hardships. Unfortunately, far too many victims of social engineeringSocial Engineering Social engineering is the psychological manipulation of people into performing actions or divulging confidential information. It is used as a type of confidence trick for the purpose of information gathering, fraud, or system access, it differs from a traditional "con" in that it is often one of many steps in a more complex fraud scheme. It has also been defined as "any act that influences a person to take any action that may or may not be in their best interests." scams give out their credit card or banking information. Many provide their full identities, such as social security numbers and more. This makes it easy for online scammers to also steal your identity to create new credit cards or other financial transactions in your name.

We have also seen a marked increase in the number of scam victims giving access to their bank accounts to their scammers. Scammers use this access to have other victims make transfer deposits into the victims’ accounts, that the scammerScammer A Scammer or Fraudster is someone that engages in deception to obtain money or achieve another objective. They are criminals that attempt to deceive a victim into sending more or performing some other activity that benefits the scammer. then withdraws via another transfer. However, they are also using these accounts to receive the monies from online loans in the victim’s name and deposited directly into the victim’s bank account.

The actions of scammers can affect your credit score in many ways. The damage can be temporarily devastating, but you can avoid serious long-term impact in some cases by quickly contacting your bank, your card issuers, and filing disputes with the major credit bureaus.

However, victims can see their credit score fall after banking or credit card transactions resulting from identity theft. Any time there is a collection activity against a victim it can damage their credit scores.

The average victim can spend a significant number of hours over months in an effort to repair the damage.

The drop in credit score can be significant – 80 to more than 100 point drop. For many consumers, losing more than 80 points could prevent them from getting credit cards and loans with favorable terms, or any credit at all.

Here’s how identity theft can affect your credit score, based on some of FICO’s key scoring components.

First Step: File a Police “Incident” Report

In the event that a scammer has used your information to create new credit cards, bank accounts, or obtained loans, it is absolutely essential that you file a criminalCriminal A criminal is any person who through a decision or act engages in a crime. This can be complicated, as many people break laws unknowingly, however, in our context, it is a person who makes a decision to engage in unlawful acts or to place themselves with others who do this. A criminal always has the ability to decide not to break the law, or if they initially engage in crime to stop doing it, but instead continues. incident report with your local police.

Do not expect them to fix it or make it go away. They may be powerless to solve this, you will need to do almost all of the work, but a police report is required by the financial institutions to engage their fraudFraud In law, fraud is intentional deception to secure unfair or unlawful gain (money or other assets), or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compensation) or criminal law (e.g., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities), or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements. A fraud can also be a hoax, which is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim. protections.

Remember that the financial institution is not your friend or on your side, they are on their side. That means they will hold you responsible to recover their money if they can. Filing the police report gives both of you the certainty that this was a crime and are able to respond appropriately.

Impact On Your Accounts

One of the great concerns that many have is protective actions taken by a bank or creditor. This is very real and you need to protect yourself from it.

When a significant case of fraud is reported to your bank, they can choose to freezeFreeze Trauma Freeze Response: While fight-or-flight is the better-known way humans respond to certain stressful stimuli, the additional less known third response "FREEZE", was not as widely studied until this last decade. Freezing as a response to a threat might seem effective, a sort of “playing dead” in the face of danger; however, in humans freezing manifests as an inability to communicate, react, make decisions, or take any action of self-preservation or defense. your accounts until a full investigation is completed. You are advised to remove your money from the bank and either close the account or freeze it yourself so you maintain control. Move your money or direct deposits to another new bank so you have continuing access to your money. If you receive a pension or social security, or direct salary deposit payments open a new account at a new bank immediately and change where your deposits are made, but wait on freezing your old account until you know the deposits are coming through in the new bank. It can take up to 60 days fro some institutions to make an account change for direct deposits.

HOW IT CAN IMPACT YOUR CREDIT

Payment History: The Identity Thief Isn’t ‘Good For It’

If a scammer or an identity thief opens a credit card or takes out a loan using your personal information, chances are he’s never going to pay the balance. Credit card issuers typically report late payments to credit bureaus once they’re 60 days past due. Payment history accounts for 35 percent of your credit score, and a single missed payment can cause it to drop by as many as 110 points.

According to CreditCards.com: It takes time to repair credit score damage from fraud, even after you’ve reported it to the card issuers and closed the cards, or bank accounts, and reported it to the police.

“Building credit takes time no matter the circumstances, but the amount of time it takes to do so varies,” said Heather Battison, vice president of TransUnion. “That’s also true for repairing credit after identity theft. Each situation is different. No matter what, it’s important to respond quickly if you believe your identity has been compromised.”

“Building credit takes time, no matter the circumstances, but the amount of time it takes to do so varies. That’s also true for repairing credit after identity theft.”

Battison said TransUnion typically resolves disputes within 45 days, if the consumer provides proper documentation. That can include a police report and a letter from the creditor stating how the account should be corrected, among other documents.

Failure to act will worsen the damage. If a thief rings up a high balance in your name and doesn’t pay, the unpaid debt will eventually be turned over to a collection agency. That’s another derogatory credit report item that can cost your credit score over 100 points. If that’s not enough, lenders can also pursue legal action against you for unpaid debts. Failing to file a police report can make it appear that it was not a real crime and that you are just attempting to avoid payment of a debt.

“If someone is unaware of this activity and these debts go unpaid – which they invariably do – the lender might sue the person for the balance they \u2018owe,’” Battison said. “People can fight these types of lawsuits and they may win if they can establish that they’re a victim of identity theft, but the battle will run up legal costs, not to mention the time it takes to tend to the matter.”

Battison also noted that a thief can use your personal information to drain your checking account, which can then result in missed payments on your legitimate credit accounts.

Credit Utilization: Take It To The Limit

If a scammer or identity thief applies for a credit card in your name and gets it, the odds of the card then being maxed out are high. FICO estimates that charging up to your card’s limit can lower your score by as many as 45 points.

Identity theft expert Rob Douglas said thieves tend to ring up high balances on fraudulent credit cards right away because they know the fraud will eventually be detected.

“The odds are that the card’s going to get closed down before they’ve done much, so they want to maximize it as quickly as possible,” Douglas said.

Length Of Credit History: Card Binge Shortens Your ‘Life Span’

If a scammer or identity thief obtains your personal information and applies for five different credit cards in a span of a few weeks or months. If all those applicationsApplications Applications or Apps An application (software), commonly referred to as an ‘app’ is a program on a computer, tablet, mobile phone or device. Apps are designed for specific tasks, including checking the weather, accessing the internet, looking at photos, playing media, mobile banking, etc. Many apps can access the internet if needed and can be downloaded (used) either for a price or for free. Apps are a major point of vulnerability on all devices. Some are designed to be malicious, such as logging keystrokes or activity, and others can even transport malware. Always be careful about any app you are thinking about installing. are approved, this significantly decreases the length of your credit history, which accounts for 15 percent or more of your credit score.

It may not be such a problem if you have several card or loan accounts that are 8 to 10 years old on average. But suppose your credit history consists of one card that’s 5 years old and another that’s 2 years old. If five new cards are added to your account at once, your average age of all accounts drops from 3.5 years to 1 year.

Your score should return to normal in a short amount of time if you report the cards as fraudulent and file disputes with credit bureaus right away.

Douglas said sophisticated credit card fraudCard Fraud Card Fraud is one of the most commonly referenced fraud definitions. It occurs when a fraudster uses a card (debit or credit) to make a purchase without the authorization of the cardholder. Card fraud can occur in-person or through digital channels. rings usually don’t open multiple credit lines in one victim’s name because it can arouse suspicion. But there are exceptions. In June 2017, a Washington woman was arrested for an identity theft spree that spanned two counties. One of the woman’s victims said in court that nine credit cards had been opened in his name and that his “perfect” credit score was ruined.

New Credit: Multiple Inquiries Add Up

A thief can only obtain so many credit accounts in your name – eventually, issuers may balk at the sight of so many new accounts and start denying further applications. But that may not stop the thief from trying, and every credit application generates a hard inquiry on your credit report.

Hard inquiries typically ding your credit score by about five points, but an avalanche of applications can send your score into a freefall. Hard inquiries not related to fraud typically stay on your credit report for two years, but fraudulent ones can be removed sooner by filing disputes with the credit bureaus, Battison said.

It’S Not The Worst Thing That Can Happen, But …

Credit score damage isn’t the worst possible outcome of identity theft. As noted by the Federal Trade Commission, a thief can file a tax return in your name and take your refund or even give your name to the police while being arrested. But a credit score collapse – whatever the cause – can hurt your ability to borrow in the short term. And it takes time and effort to reverse the impact of identity theft.

“Identity theft can have a lasting effect if it’s not addressed quickly and properly,” Battison said. “That’s why we always recommend customers take preventive measures to protect their credit.”

By taking the right steps to protect yourself – by checking your credit report regularly and securing your personal information, among others – you can focus on maintaining and building excellent credit without fear of sabotage.

WHAT TO DO WHEN YOUR IDENTITY HAS BEEN STOLEN

If you’ve been targeted by an identity thief, it’s critical to take the following steps as quickly as possible to mitigate the damage.

1. Contact the card issuer. If you spot a credit card account in your name on your credit report that you didn’t apply for, call the bank or issuer’s fraud department and send an additional notification in writing.
2. Place a fraud alert on your account. Contact Equifax, Experian or TransUnion and place a fraud alert » on your report. You only have to contact one of them – the bureau you call is required to notify the others, and they will all be alerted within 24 hours.
3. File a dispute with a credit bureau. Notify one of the credit reporting agencies in writing of inaccurate information that appears on your credit report. Explain why it’s inaccurate and request that it be removed. If the information is proved to be inaccurate, all three credit bureaus must correct it in your file.
4. Call the police. Contact your local authorities and obtain a copy of the police report. The police report allows you to prove a crime has been committed when you’re dealing with creditors and filing identity theft reports.
5. Change your passwords. Create new passwords for every online account that contains your personal information. Start with your bank and credit card accounts and then change passwords for other accounts that involve money transactions (i.e., utility providers, Netflix, PayPal).

Source: CreditCards.com – visit their website for more information about credit card fraud protections and about other credit card needs

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SCARS™ Team
A SCARS Division
Miami Florida U.S.A.

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