Your credit report and score help lenders assess your financial situation. If you’ve been a victim of identity fraud, here are some ways it could affect you.
A new hard search
If a fraudster makes a credit application in your name, the lender will check your report. This is a hard search and it’s visible to you and other lenders. The search will stay on your report for 12 months, regardless of the lender’s decision, and it could cause a dip in your score.
Increased credit utilisation
Credit use (or utilisation) is how much of your available credit you use. Lenders look at this when assessing how you manage credit. We suggest keeping your credit use between 10% and 70% of your available credit at any one time. If a fraudster increases your utilisation or maxes out your cards, your score could drop.
Late payments
Your payment history shows lenders whether you pay on time. If a fraudster opens an account, it’s unlikely they’ll make the repayments. If you (or the fraudster) miss a payment, it will show on your report for 6 years. Each missed payment can dent your score and affect your financial situation.
Default
A default appears when a lender closes an account because payments were missed. The number of missed payments that leads to a default varies by lender. For some, missing 1 payment may be enough; for others, it could be around 6 before the account is closed. This information remains on your report for 6 years from the date the account was settled or defaulted.
Dealing with identity fraud and your credit report
Most fraudulent information on your credit report can usually be removed by reporting it to the company involved, like a lender or credit card provider. They’ll investigate and, if it’s confirmed as fraud, update your report.
However, it’s hard to say exactly how this will affect your credit score. That’s because your score depends on your full credit history, and other genuine changes, like new accounts or payments, might also influence it at the same time.
See our article for more on what to do if you’ve been a victim of fraud.