What identity theft does to your credit and how to stop it
Identity theft damages your credit score when someone opens accounts, takes out loans, or makes purchases in your name without permission. The accounts show up on your credit report as debt you owe, even though you never agreed to them. Your score drops because credit bureaus see unpaid balances, missed payments, or too many new accounts opened at once — all signs of financial risk to lenders.
Stopping the damage means acting fast. The sooner you report the theft, the sooner you can dispute the fraudulent accounts and prevent new ones from being opened. You do not need to pay money to do this — federal law gives you the right to dispute false information on your credit report for free, and you can place a freeze on your credit file to block thieves from opening new accounts.
Lower-income households face particular risk because identity thieves often target people with less money to spend on recovery. A stolen identity can mean months of dealing with debt collectors, disputing charges, and rebuilding your score — all while managing tight finances. The steps in this guide cost nothing and can be done from home.
Key Takeaways
- Contact the three credit bureaus — Equifax, Experian, and TransUnion — to place a credit freeze that stops thieves from opening new accounts in your name.
- Request your free credit reports from annualcreditreport.com and look for accounts you did not open or charges you did not make.
- File a report with the Federal Trade Commission at identitytheft.gov, which creates an official record you can use to dispute fraudulent accounts with creditors.
- Dispute false information directly with the credit bureaus in writing, and they must investigate within 30 days at no cost to you.
- Place a fraud alert with the bureaus if you cannot freeze your credit, which requires creditors to verify your identity before opening new accounts.
Getting your free credit reports and spotting the damage
You are may have access to to one free credit report per year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Go to annualcreditreport.com, the official site run by the three bureaus themselves. Do not use other websites that claim to offer free reports — many charge hidden fees or try to sell you credit monitoring services.
When you receive your reports, look for accounts you do not recognize, addresses you have never lived at, or inquiries from companies you never contacted. Write down the name of each fraudulent account, the account number if listed, the amount owed, and the date it was opened. This list becomes your evidence when you dispute the accounts later.
If you find fraud on one bureau's report, it may not appear on the others yet. Check all three reports even if you only spot theft on one. Thieves sometimes open different accounts with different bureaus to avoid detection.
Placing a credit freeze to block new accounts
A credit freeze stops credit bureaus from releasing your credit file to lenders, which means thieves cannot open new accounts in your name. You place the freeze directly with each of the three bureaus — Equifax, Experian, and TransUnion. The freeze is free and takes effect within one business day.
Contact each bureau by phone or online. Equifax: 1-800-349-9960 or equifax.com/personal/credit-report-services. Experian: 1-888-397-3742 or experian.com/freeze. TransUnion: 1-888-909-8872 or transunion.com/credit-freeze. Have your Social Security number and proof of address (a utility bill or lease) ready when you call.
When you place a freeze, each bureau gives you a PIN or password. Write this down and keep it safe — you will need it if you want to temporarily lift the freeze later to explore for credit. A freeze stays in place until you remove it, and it does not cost anything to place or remove.
Filing an identity theft report with the FTC
The Federal Trade Commission (FTC) runs identitytheft.gov, where you can file an official identity theft report. This report creates a record that creditors and credit bureaus must accept as proof of the theft. You will need the information from your credit reports — the fraudulent account numbers, amounts, and dates opened.
Go to identitytheft.gov and click "Report Identity Theft." Answer questions about what happened, which accounts were opened without your permission, and whether you have already contacted the bureaus or police. The FTC generates a report you can read and print. Save this report — you will send copies to creditors and bureaus when you dispute the accounts.
Filing with the FTC does not cost money and does not require a lawyer. The report is your evidence that you reported the theft, which protects you if a debt collector tries to collect on a fraudulent account.
Disputing fraudulent accounts with credit bureaus
Once you have your FTC report and your list of fraudulent accounts, send a written dispute to each credit bureau that is reporting the false information. You can dispute by mail or online through each bureau's website, but mail creates a paper trail.
Write a straightforward letter that says: "I am disputing the following account(s) because they were opened without my permission and are the result of identity theft. [List account numbers and amounts.] I have filed an identity theft report with the FTC [include report number]. Please investigate and remove these accounts from my credit report." Include a copy of your FTC report and a copy of your government-issued ID.
Mail your dispute to the bureau's dispute address. You can find the correct mailing address on your credit report or on each bureau's website. Keep a copy of everything you send. By law, the bureau must investigate within 30 days and tell you the results in writing. If the bureau cannot verify the account is legitimate, it must remove it from your report.
If the bureau does not remove the account after your first dispute, you can dispute again. Some fraudulent accounts take multiple disputes to remove, especially if the thief is still using them.
Disputing charges with the creditors directly
In addition to disputing with the credit bureaus, you can dispute directly with the creditor — the bank, credit card company, or store that opened the fraudulent account. This is separate from disputing with the bureau and often moves faster.
Call the creditor's customer service number (on your credit report or online) and tell them the account is fraudulent. Ask for their fraud department. Explain that you did not open this account and that you have filed an identity theft report. Ask them to close the account and remove it from your credit report.
Follow up with a written letter that includes your FTC report number and a copy of your identity theft report. Send it to the address the creditor gives you. Keep records of every call and letter. If the creditor does not respond within 30 days, send another letter and consider filing a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov.
Using a fraud alert if you cannot freeze your credit
If you cannot place a freeze for any reason, you can place a fraud alert instead. A fraud alert tells creditors to verify your identity before opening new accounts. It is free and lasts one year, though you can renew it.
Contact one of the three bureaus and ask for a fraud alert — you only need to contact one, and it will notify the other two. Equifax: 1-800-349-9960. Experian: 1-888-397-3742. TransUnion: 1-888-909-8872. A fraud alert takes effect within one business day.
A fraud alert is weaker than a freeze because creditors can still open accounts if they follow the verification steps. A freeze is stronger because creditors cannot see your file at all. If you can place a freeze, do that instead of a fraud alert.
Rebuilding your credit score after identity theft
Your credit score will not recover overnight. Fraudulent accounts stay on your report for seven years from the date they were opened, even after you dispute them. However, once you remove the accounts or mark them as disputed, they have less impact on your score over time.
While you wait for your score to recover, focus on the accounts that are actually yours. Pay bills on time, keep credit card balances low, and do not close old accounts. These actions show lenders that you are managing credit responsibly, which gradually raises your score.
If you have trouble affording payments on legitimate accounts because of the identity theft, contact your creditors and explain the situation. Many offer hardship programs or payment plans for people dealing with fraud recovery. Some may also agree to remove negative marks from your report if you can show the damage was caused by identity theft.
Frequently Asked Questions
How long does it take to remove fraudulent accounts from my credit report?
The credit bureau has 30 days to investigate your dispute and tell you the results. If they find the account is fraudulent, they must remove it when ready. If the creditor is still using the account, removal can take longer — sometimes several months of back-and-forth disputes. Keep disputing until it is gone.
Do I have to pay for credit monitoring or identity theft protection services?
No. A credit freeze is free and more effective than any paid service. You can check your credit reports for free once a year at annualcreditreport.com. If you want to monitor more often, some bureaus offer free monitoring, though paid services offer more features. A freeze alone protects you from new accounts being opened.
What if a debt collector contacts me about a fraudulent account?
Tell them the account is fraudulent and that you have filed an identity theft report. Send them a written letter with a copy of your FTC report and tell them to stop contacting you. Keep records of all contact. If they continue calling after you have sent written notice, file a complaint with the CFPB.
Can I get my money back if the thief made purchases on a fraudulent credit card?
If the account is a credit card, you are not responsible for fraudulent charges — federal law limits your liability to $50, and most card issuers waive even that. If the thief opened a bank account or took out a loan in your name, recovery is harder and depends on the bank's policies. Report it to the bank and provide your identity theft report.
Should I file a police report for identity theft?
Filing a police report is optional but can help. Some creditors and bureaus take disputes more seriously with a police report on file. Call your local police non-emergency line and ask how to file a report for identity theft. Some departments allow you to file online. Keep a copy of the report number for your records.