This article discusses the effects of identity theft to credit reports and credit scores.
Identity theft is a crime whose effects have reached great proportions. Almost anyone can be a victim. Why, even the wealthiest and most powerful men have fallen victim to this crime! This just means that avoiding it will have to need a lot of vigilance and a little bit of luck.
The thief’s main purpose in committing this crime is most often for financial gains, thus the victim’s finances are compromised. His credit accounts are breached so that the victim acquires large debts that could be hard to pay off. This could lead to emotional instability and mental stress on the victim’s part since his life is being manipulated by someone who has not been seen nor felt and in the end, the effects would weigh down on him.
The effect that poses the greatest risk to the victim is the destruction of his reputation. His records will show that he has applied for several credit accounts, used up his credit limits, and gained outstanding debts. The victim’s credit score will be severely affected or lowered. The worst case scenario is that, with a low score, the victim will not be able to apply for new loans and with a ruined record, surely no lender will think twice in rejecting him.
Credit scores are important in our lives since they serve as ratings of how responsible we are in dealing with our credit. It is calculated using a numerical formula and is analyzed using complex strategies. Each financial institution adopts their own way of computing for credit scores, but they all rely in credit reports for their calculations. This is due to the reason that these reports practically contain everything there is needed to know about a person.
Credit reports are documents that include a person’s credit history or financial status. Not only that, it also includes personal information like the person’s current address, or employer, and most specially his criminal records. It is the ultimate guide to a person’s life, so to speak. Therefore, it follows that to have a good credit score, your credit reports must also be in a good light.
These reports are compiled or researched by the three main credit bureaus. In the U.S., the national credit bureaus are TransUnion, Experian and Equifax. The U.S government has obliged these bureaus to provide free credit reports to consumers and so, a consumer may receive a free report from each of these bureaus every year.
