Identity Theft Can Damage Your Credit: Here’s What You Can Do

September 10, 2021 - by Identity Champion

Victims of identity theft can experience significant damage to their credit score, depending on the type of identity fraud committed. The Identity Theft Resource Center (ITRC) found that 42% of victims surveyed first discovered they were the victim of an identity crime when they checked their credit report.¹ 

The good news is that the damage identity theft does to your credit report can be fixed.² The downside is that it can take time and effort for that damage to be repaired, which can lead to financial difficulties while your identity is being restored.  

Restoring a stolen identity can take 600 hours on average.³ Of the identity theft victims surveyed by ITRC, 32% reported experiencing financial-related identity problems including being turned down for credit or loans, and being unable to rent an apartment or find housing.¹

Taking steps to guard against identity theft and catch signs of fraud early can help to limit the damage done to your credit score and can reduce the amount of time spent resolving it. Read on to learn about the ways identity theft can impact your credit score as well as protective measures you can take. 

Poor Payment History

Your payment history is the most heavily weighted factor (35%) when the credit reporting agencies (Experian, Equifax, and TransUnion) calculate your FICO credit score.

When fraudsters open a new credit card or loan with stolen information, or gain control of an existing account, they do not have plans to pay back the debt they’re racking up. 

When a payment is 30 or more days past due, lenders can report the missed payment to the credit bureaus. If not caught immediately, all of those missed payments due to fraudulent activity will start showing up on your credit report and affecting your credit score. 

A missed payment may cause your credit score to drop significantly, and unpaid balances may eventually be sent to a collection agency, which could impact your score even more.

Once you’re certain that identity fraud has taken place, you’ll need to contact the three credit reporting agencies and request that the fraudulent activity be removed from your credit report — otherwise, it will continue to affect your credit score. (Learn more about identity restoration here.)

Increased Credit Utilization

For a good credit score, it’s recommended that you keep your credit utilization rate — the ratio of credit used to credit available — under 30%. For example, if you have $10,000 available to you in credit, try to only use $3,000 or less at a time.

When identity thieves gain control of a credit account, they tend to move fast and rack up as high a balance as possible before they’re caught. This can result in maxed-out credit cards and a high credit utilization rate, both of which can wreak havoc on your credit score.

Once fraudulent charges are removed from your credit report, your credit utilization rate will eventually return to normal and be reflected in your credit score.

Disruptive New Accounts

If a fraudster is able to open new credit card accounts or loans in your name, this can affect your credit score in multiple ways. 

The length of your credit history and the average age of your credit accounts are used to calculate your credit score. If several new accounts are suddenly opened, this will decrease the average age of your credit accounts and have a negative impact on your score.

Opening new accounts will also result in hard credit inquiries being added to your report. When you make a request to the credit reporting agencies to see your credit report, this is known as a “soft inquiry,” whereas a lender requesting to see your credit report before approving a new line of credit results in a “hard inquiry.” Too many hard inquiries over a short period of time will cause your credit score to fall. 

Once fraudulent accounts and hard credit inquiries are identified, you’ll need to file disputes with the credit reporting agencies in order to remove these from your record.

How to Protect Your Credit Score

No one wants to find out they’re a victim of identity theft by getting a call from a debt collector. So how can you protect yourself and your credit score, and be alerted to suspicious activity as soon as it happens?

There are now credit monitoring services available that will automatically notify you of changes in your credit activity, such as new accounts being opened or large purchases being made.

And if you’re looking for a more comprehensive solution that monitors your credit as well as other aspects of your identity, an identity monitoring service such as AAA Identity Champion may be a good fit. When considering identity monitoring, look for one that goes beyond credit monitoring and alerts you to signs of suspicious activity with internet and dark web monitoring, and social media monitoring. 

Many identity monitoring plans, such as Identity Champion’s Protect and Complete plans, also have access to financial (bank or credit card) account takeover monitoring, hands-on identity restoration agents, and identity theft insurance for funds stolen from your financial accounts and eligible expenses associated with restoring your identity, such as legal fees, lost wages, childcare costs, and more.⁴

A monitoring service may save you time and money in the long run, but if you’re not ready to sign up, you can always contact the credit reporting agencies every three to four months to manually check for fraudulent charges and accounts. You may also want to activate a credit lock or credit freeze which can help prevent identity thieves from opening most types of credit accounts under your name. (Experian Credit Lock is included in AAA Identity Champion Complete)

Your credit score plays an important role in your finances so it can be worth taking the time to protect. Consider signing up or upgrading to Identity Champion Complete to get credit monitoring for all three credit bureaus.

The content provided in this blog post is for informational purposes only. A3 Labs LLC makes no representations as to the accuracy or completeness of the information contained in this or any blog post on the Identity Champion website.

1 Source: The ITRC’s 2021 Identity Theft: The Aftermath Study,

2 Source:, Recovering from Identity Theft,!what-to-know

3 Source: 2021 SANS Institute - Identity Theft Whitepaper,

4 The Identity Theft Insurance is underwritten and administered by American Bankers Insurance Company of Florida, an Assurant company under group or blanket policy(ies). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions. Review the Summary of Benefits.