Four Steps to Fixing Your Credit Score if You’ve Been Scammed

With many identity theft scams on the rise (such as the fake Royal Mail text), personal finance experts, Ocean Finance, have pulled together four tips for scam victims to fix their credit report.

Four Steps to Fixing Your Credit Score if You’ve Been Scammed

1. Report it to the correct credit reference agencies

Check your credit report for free using one of the main credit reference agencies in the UK – such as Experian, Equifax or TransUnion. If you see anything you do not recognise, report it to the agency you used. They will then raise the issue with the relevant lender. It can take between 4-6 weeks for the data to be amended on your report, so don’t be alarmed if it doesn’t change straight away.

2. Not happy with the result? Escalate it further  

Make sure you speak to your lender or bank directly if you are a victim of fraud. Whether you’re due a refund for stolen funds depends on several factors (such as if you authorised the payment, for example). If you don’t agree with the lender’s decision, you could raise a complaint with the Financial Ombudsman. They’ll be able to look into it from an unbiased point of view, taking your circumstances into account.

3. Consider adding a fraud alert to your credit report

If you do this, future lenders will be alerted to the fact that they need to confirm your identity before they offer credit in your name. This will make it more difficult for fraudsters to pretend to be you. Setting up an alert won’t affect your credit score, but you may have to pay for this service.

Equifax’s service is free for 30 days, followed by £7.95 a month. Or Experian provides similar protection with ‘Identity Plus’ which tells you if they spot anything suspicious. On top of this, they’ll send you a daily fraud report helping you to recognise any fraudulent activity. Experian comes with a free 30-day trial, then it’s £6.99 a month with Identity Plus.

4. Add a Notice of Correction password for free

Alternatively, you could ask the credit reference agency to add a password to your credit report. They can write a note (known as a Notice of Correction) containing a password of your choice. Lenders will see this note whenever someone applies for credit in your name and will ask for this to be confirmed before they lend any money. This is free to do and adds an extra layer of security. But remember to use a unique password so fraudsters won’t be able to guess it correctly.

The Most Asked Identity Fraud Questions, Answered 

What is identity fraud?

Identity theft is the criminal act of stealing personal information from another person. It comes in many forms, but often it’s financial data or passwords that are stolen. It tends to lead to identity fraud, where stolen data is used to gain money. Fraudsters may take out credit and buy goods in your name, or use your existing bank details to obtain further credit and rack up debt for example. This can affect your credit score and your ability to take out additional or future credit.

How can I find out if someone is using my identity?

In a recent survey of 1,000 Brits, Ocean Finance discovered that 1 in 8 (12%) are unaware whether they have been a victim of fraud or not. To help, Ocean Finance have listed some of the tell-tale signs of being scammed:

• New searches and/or accounts on your credit report that you do not recognise
• Unusual activity on your bank and/or credit card statements
• Receiving a credit card you did not request
• Being approved or rejected for credit applications you did not make
• Having a genuine credit application rejected when you have a good credit score
• Receiving letters or phone calls chasing you for money on accounts you have not opened

Ideally, you should get into the habit of checking your statements and credit reports once a month and reporting anything suspicious straight away.

Does identity fraud affect your credit score? 

Yes, if fraudsters obtain or use credit in your name and fail to repay it, this will show on your credit file for lenders to see. It can affect your credit score, and in turn, your ability to get additional finance. A single missed payment can knock about 130 points off your credit score. Three to six missed payments can lead to defaults, which can impact your score further.

Multiple credit applications in your name made within a short space of time can damage your credit score. Whether they’re accepted or rejected, it can give lenders the impression that you’re struggling financially. Plus, if fraudsters max out your credit cards and overdrafts, this will increase your credit utilisation ratio, making you seem irresponsible. Lenders may think it’s too risky to lend you money.