Your credit report and score are what lenders use to assess your credit worthiness. If you’ve been a victim of identity fraud, these are some examples of how it could impact you:
1. A new hard search
If a fraudster makes a credit application in your name, the lender will check your report before making a decision on whether to accept the application. This is called a ‘hard search’ and will be visible to you as well as other lenders. Regardless of their decision, the search will remain on your report for 12 months and could cause a dip in your credit score.
2. Increased credit utilisation
Credit utilisation is how much of your available credit you use each month. It’s a factor lenders take into consideration when assessing your credit worthiness as they like to see how you manage your debt. We usually recommend you use no more than 30% of your available credit at any one time. If a fraudster increases the credit utilisation on your accounts or maxes out your cards, this could cause your score to drop.
3. Late payments
Your payment history is what some lenders use to determine whether you’re able to pay your debt on time. When a fraudster opens a new account, it’s highly unlikely that they’ll make the repayments each month. If you (or, the fraudster) miss a payment on a credit account, the account will show six years of payment history, even once it’s paid off. Each missed payment can cause a dent in your credit score which will affect your credit worthiness.
A default appears on your credit report when a lender closes your account because you’ve missed payments. The number of missed payments a lender will deem worthy of defaulting your account varies - for some, you only need to miss one payment, for others, you could miss six or so before they close your account. This information will remain on your credit report for six years from the date the account was settled or defaulted.