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How Identity Theft Can Impact Your Credit Scores

, by Kelsey

When people think about identity theft, they often focus on credit card fraud—someone racks up fraudulent transactions on your debit or credit card. This type of identity theft can be extremely frustrating, but luckily, credit card companies and banks have security measures and processes in place to keep your cards protected. It's the other types of identity theft you have to worry about.

Other types of identity theft show symptoms slowly. You might not know about the theft for weeks, months or even years after it occurs. Most victims don't even know where or when the theft occurred.

And then one dismal day, you'll discover that an identity thief has opened up loans, taken on a mortgage and even gotten arrested—all using your personal information.

For this kind of theft, one of the most common symptoms is a suspicious drop in your FICO® Scores. When negative information starts to show up on your credit reports, a dropping FICO Score could be your first clue. Learn more about what's included in your credit reports.

Here's what could cause your scores to drop:

  • Hard Inquiry

If a thief uses your Social Security number and name to open a credit card or loan, the lender will likely pull your credit history (thinking the thief is you). This will result in a hard inquiry. The impact a hard inquiry has on your FICO® Scores might be minimal, but you should pay attention to even a small drop you can't explain.

  • Late payment

If you don't notice the hard inquiry, a thief may be able to get approved for a credit card or loan using your personal information. But this is a thief we're talking about — he's probably not going to pay his bills. So now his bills are your bills. Late payments can have a substantial impact on your FICO® Scores, and the later the payments are the more your scores will likely be damaged.

  • A cash loan in collections

It's possible for a crook to get a cash loan, like a payday loan, in your name without it showing up on your credit report. Some cash loan companies pull credit reports, but not all of them do. If the lender doesn't pull a credit report you won't see a drop for a hard inquiry or a late payment. But months or even years later, after the thief spent all the cash and moved on, your unpaid cash loan goes to collections. Collection accounts show up on your credit report and can substantially impact your FICO® Scores.

  • Foreclosure

Identity thieves might not be looking for quick cash. They might actually steal someone's credit information in order to take on a mortgage and play house. The thief wants to stay put for a while, so he makes his payments. Meanwhile, you're blissfully unaware and not monitoring your credit reports. And then one day the thief decides it's time to upgrade. He moves out, stops paying the mortgage and finds somebody else's credit to prey on. A few months later, a foreclosure hits your credit report and FICO® Scores. Ouch.

Monitoring your FICO® Scores is a great way to monitor for identity theft. That's why myFICO offers a way to monitor your credit reports, FICO® Scores and identity — all in one place. By subscribing to FICO® Ultimate 3B, you can have peace of mind knowing that we're monitoring your identity and credit. Learn more about FICO® Ultimate 3B.


Equal parts project manager, content marketer, social strategist and writer, Kelsey is a marketing manager at FICO and financial health enthusiast. Focused on making meaningful connections with consumers on their way to financial fitness, Kelsey is always good for a creative tip on how to keep your budget in check.