If you’re planning on using a mortgage to buy a home, mortgage lenders will review your credit score as part of your application. Unfortunately, all Americans are at risk of something that can severely damage your credit score: identity theft.
The U.S. Department of Justice defines identity theft as someone obtaining and using another person’s data for fraud or deception, typically for economic gain. Considering a staggering 17.6 million Americans experienced identity theft in 2014 alone, and because your credit score is most important factor in determining your mortgage interest rate (which establishes your monthly mortgage payment), preventing identity theft is something we should all take seriously.
As the first blog in a three-part series on identity theft, we introduce identity theft and its warning signs. Stay tuned for our next two blogs on strategies to prevent identity theft, and steps you can take to successfully buy a home if you’re an identity theft victim.
Identity theft occurs in a variety of ways
Your identifying information, such as your Social Security number or bank account details, can be acquired and used against you through various methods and tactics. Common ways include:
- Hacked online databases
- Stolen wallets and mail
- Hunting through garbage for information (known as “dumpster diving”)
- Falsely posing as a banker or credit card company
- Unsupervised access to information in a person’s home (such as from dishonest cleaners and caregivers)
Once a criminal steals your identity, they can open a new credit card under your name under a different home address, and charge expenses you’re unaware of. During this time period, the credit card company thinks you’re not paying your bill, which can quickly damage your credit.
Look for warning signs that your information was stolen
Because identity theft can occur to anyone, including individuals who try to prevent it, it’s critical to stay aware of signs that your information was stolen. These include:
- Withdrawals from your bank account that you’re unable to explain
- Not receiving expected bills in your mail
- Debt collectors contacting you about debts that are not yours
- Unfamiliar accounts and charges on your credit report
- Medical providers billing you for services that you did not use
- Your health insurance rejecting your legitimate medical claim because of records showing you’ve reached your benefits limit
- Your medical records showing a condition you don’t have
- Being notified by the IRS that more than one tax return was filed in your name, or that you have income from an employer you have never worked for
Awareness of identity theft is the first step towards prevention
By learning how identity theft occurs, and knowing signs that it happened, you can create an identity theft prevention strategy. To learn how to create this strategy, stay tuned to our upcoming blog: How to Prevent Identity Theft.