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Credit Reports vs. Credit Scores

When you suspect your identity was stolen, one of the common first tips is to check out your credit reports — detailed statements of your bank accounts, credit cards and other bills and debts you owe, put together by three different reporting agencies. Do you see suspicious accounts, or credit cards you didn't open? Those are your first big clues that you are a victim of identity theft.

But what if you're applying for a mortgage or financing for a new car? What kind of damage could identity theft do to your chances for a good interest rate?

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Businesses typically use a person's credit score to determine what kind of financing they might qualify for. Credit scores are a single number calculated with data available through a person's credit report.

Missed payments, large debts and other things on a credit report can negatively affect a credit score, according to the Federal Trade Commission. That score typically is calculated by FICO, previously known as the Fair Isaac Corporation, based in San Jose. So, to fix a credit score, one must fix the credit report that score is based on, according to The New York Times. But the methods of doing so are different if you've had your identity stolen than if you've made a string of bad financial decisions.

Now the fun begins: Fixing the problems on your credit report created by an identity thief.

  • First the FTC recommends notifying each credit reporting company — Experian, TransUnion and Equifax — of the problems.
  • Next, contact the fraud department at each business where the erroneous accounts and charges were opened or made, the FTC advises.
  • Create an identity theft report. Notify the FTC of the fraudulent activity in your name. Take your "Identity Theft Affidavit" with you to the police department and file a crime report. Once you're done, these together will compose your identity theft report, according to the FTC.
  • Ask businesses and credit reporting agencies to block the information on your accounts related to the identity theft. The FTC has detailed guidelines on the best way to do this.

This process might take some time, but cleaning up your credit report is the only way to improve your credit score. Depending on the extent of the identity theft, you might also look into fraud alerts, credit freezes and other protections available to identity theft victims.

Good luck!

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