In this article:
Identity theft can occur in many different forms, and some are more damaging than others. While some fraudsters may simply steal your credit card information and make unauthorized charges (often an easy fix if your credit card company doesn't catch it first), others go much bigger.
Depending on what personal information an identity thief has, here are five surprising ways their criminal activity can impact you.
1. Your Credit Score Could Drop
If an identity thief manages to get access to your Social Security number, they could open one or more credit accounts in your name, rack up a large amount of debt and never pay the bill. Because your payment history is the most influential factor in your FICO® Score☉ , even one missed payment can cause significant damage to your credit.
If you've already been affected, you have the right to dispute inaccurate or fraudulent information found in your credit reports with the three credit bureaus—Experian, TransUnion and Equifax. You also have the right to place a security freeze on your credit to prevent further damage.
2. You Could Be Denied Health Insurance Coverage
With your name, Social Security number, date of birth and health insurance information, a fraudster could get medical care or prescriptions or buy medical devices in your name.
If the thief maxes out your coverage, it could result in you being denied coverage when you need it, forcing you to pay out of pocket until you can get the situation resolved.
If you receive an explanation of benefits or a bill for services or a prescription you don't recognize, get a call from a collection agency for a medical debt you don't owe or get a notice from your insurance provider that you've reached your benefit limit, take quick action.
Start by checking your online account with the health insurance provider and your medical providers, and review your records for errors. Then, contact your insurer and ask them to investigate the fraud.
3. Your Tax Refund Could Be Stolen
With your name and Social Security number, an identity thief may be able to file a fraudulent tax return in your name—either with your income information or manufactured details. In many cases, you won't even know until you file your return and get a notice of a duplicate return, a letter from the IRS about a suspicious return or an IRS bill that doesn't make sense.
If you believe you're a victim of tax identity theft, contact the IRS immediately and notify them of the fraud. You'll be able to rectify the situation, but it can delay your refund for weeks or even months.
The good news is that you can often avoid tax identity theft by filing your return as quickly as possible after tax season begins, usually at the end of January.
4. Your Insurance Rates Could Rise
An estimated 95% of auto insurance companies and 85% of homeowners insurance companies use a credit-based insurance score to help calculate rates for policyholders, according to the National Association of Insurance Commissions. The only states that prohibit the practice are California, Hawaii and Massachusetts.
If your credit report contains derogatory marks due to fraudulent activity, it could result in a higher insurance premium. That said, most states don't allow insurers to use the score as the sole reason for hiking your rate, but if you have other negative marks, such as multiple claims or a poor driving record, it could cost you more.
Fortunately, many states require insurers to notify applicants and policyholders if they take adverse action due to credit-related issues. If you receive such a notice, you can file a dispute with the credit bureaus and appeal the insurance provider's decision.
5. Your Job Prospects May Be Hurt
Most employers don't check your credit when you apply for a job. But if the position is a managerial role or involves handling money, trade secrets or security clearance, you may be subject to a credit background check.
While that check doesn't involve your credit score, employers will be able to see if any debts are past due—a consequence of a fraudulent credit account that's gone unpaid.
The good news is that employers are required to provide you with the information they used from consumer reports to make their decision, and you have the right to dispute inaccurate and incomplete information found in your credit reports.
You can also explain the situation to the employer and appeal the decision.
6. Your Child's Financial Aid May Be Impacted
One out of every 50 children is a victim of identity theft, according to Javelin Strategy & Research. In addition to fraudulent credit report information, child identity theft can also result in your kid being denied financial aid when they're ready to attend college—this can happen if the identity thief uses your child's information to get a job, attaching income to their name.
To prevent child identity theft, safeguard their Social Security number and consider freezing their credit reports. You can also check your child's credit reports to make sure there are no issues.
If it's too late, and your child's financial aid decision has already been made, they can file an appeal with their school's financial aid office and explain the circumstances. You can also help them dispute the inaccurate information with the credit reporting agencies and other organizations involved.
Make It a Priority to Safeguard Yourself
Identity theft can have devastating ramifications on its victims, including some you may not have thought about. While there's no surefire way to completely avoid it, it's important to take proactive steps to protect yourself from identity theft.
That includes monitoring your credit regularly and watching for potential issues. With Experian's credit monitoring service, you'll get free access to your Experian credit report and FICO® Score, as well as real-time alerts when changes are made to your credit report. Being vigilant about your personal information can help minimize your exposure to fraud.