How Identity Theft Impacts Credit Score

For many victims of identity theft, the biggest hurdle to financial recovery is trying to rebuild credit.

As leading cyber and data privacy specialists in Seattle, we understand that digital protection has never been more important. The only way to safeguard your personal information online is through robust cybersecurity measures. Schedule a free consultation to learn more.


If you’re like the vast majority of people, you use the internet every single day. And even on the rare occasion when you don’t open a web browser, you still rely on the digital transfer of information every time you swipe a credit card. The reality is that modern life happens online; however, all the rules are different.


Believe it or not, every person who traverses the internet carries a currency with them. This currency, however, doesn’t come in dollars or euros or any other physically bound denomination. It exists as personal information, the footprints we leave behind that connect us to our real lives. And it is very, very valuable to cybercriminals.


With enough of this currency, a cybercriminal can impersonate you online, making purchases and other financial transactions that have hefty real-world consequences. By stealing your identity, hackers can leverage your credit for financial gain, and by the time you’ve realized it, there may or may not be much you can do to counteract the negative impact.


Although identity theft can negatively affect your life in myriad ways, few of them are as detrimental as the damage it does to your credit score. Here’s the good news: There are plenty of ways to effectively protect yourself from identity theft and keep your personal information out of the hands of hackers. But they are preventative measures, which means you need to act now.


Curious about how identity theft could impact your credit score? Keep reading to learn everything you need to know about what it looks like, why it happens and how to prevent it.


Are you concerned about online attacks? You should be. Even individuals are vulnerable to cyberattacks, but businesses are prime hunting grounds. Fortunately, cyber crimes are preventable when you do due diligence.
By Design Law can help you get started.


Understanding Identity Theft

Before diving into the credit score implications, it’s essential to understand what identity theft entails. Identity theft happens when unauthorized users gain access to personal information with the intent to commit fraudulent activities. This personal information could be your Social Security number, bank account details, credit card information or any other sensitive data that helps them achieve their means.


Make no mistake: You don’t have to be blatantly irresponsible to become the victim of a cyber attack. Hackers use a variety of methods, from phishing and malware schemes to social engineering and data breaches to pilfer your most valuable information. No matter what technique they use, their actions have the potential to wreck your credit.


Here’s How Identify Theft Wrecks Your Credit

If you’ve ever bought anything on credit, applied for a loan or even submitted a rental application, you understand the importance of having a good credit score. Your score serves as a crucial financial indicator to lenders and financial institutions, a numerical representation of financial behavior and creditworthiness.


As such, your score is vulnerable to irresponsible and malicious usage Here are some of the most prominent ways in which identity theft ruins your credit:


  • Submitting unauthorized credit applications. One of the first steps that a hacker might take is to apply for credit in your name. They may target high-limit credit cards, personal loans or similar lines of credit. If successful, they’re likely to accumulate debt rapidly. When the thief defaults on payments, the delinquencies will appear on your credit report, driving your score down.


  • Maxing out credit accounts. If hackers get access to your existing credit cards, they’re likely to max those out before moving on to more difficult means of financial theft. Maxing out your credit cards increases your credit utilization ratio, causing your score to drop.


  • Creating unresolved debts and collections. Victims of identity theft often struggle to settle all of the debts accumulated by the person who stole their identity. They may lack the necessary funds to resolve the debts, or they may just be unable to find all of them. This can also lower your credit score, especially if those debts go to collections.


  • Altering your address and personal information. In order to make online purchases, hackers typically need access to other types of personal information, such as your address. If they’re unable to find it, they may attempt to alter your personal information, which allows them to operate undetected for more extended periods.


Ultimately, there’s no limit to the havoc an experienced identity thief can wreak on your finances. Even if you fail to take the steps to prevent a cyberattack, you can still mitigate the effects by recognizing the signs and taking swift action. However, preventing identity theft is much easier than cleaning up after it.


Ways to Safeguard Your Identity

As cybersecurity and data privacy attorneys , we suggest a full-spectrum, multi-tiered approach to protecting your personal information. The best way to ensure online safety is by working with a specialist, but there are a number of easy steps you can take on your own:


  • Strengthen your passwords across platforms

  • Enable multi-factor authentication whenever possible

  • Be wary of suspicious emails, messages and phone calls requesting personal information

  • Store physical and digital copies of sensitive documents securely and dispose of them safely by shredding

  • Regularly update devices, apps and antivirus software

  • Limit the amount of personal information you share on social media


Taking these preventative measures can go a long way in protecting yourself online, but they by no means constitute a comprehensive strategy. For robust protection, you need to work with a cyber and data privacy specialist.


By Design Law: Top-Tier Cybersecurity & Data Privacy Solutions Customized for You

At By Design Law , we know that there is no one-size-fits-all solution to online protection. Individuals and companies have unique needs based on myriad factors, which is why we meet them with custom-tailored strategies.


Maybe you’ve had your identity stolen; maybe you haven’t. Or maybe you’re just not aware of it. Whatever your situation, you need to understand that your personal information is vulnerable until you take active measures to protect it. Luckily, you don’t have to do it alone.


Ready to get started? Contact us online to
schedule a free consultation .

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