Credit & Identity Theft Resources
Learn everything you need to know about credit scores, credit repair, and protecting yourself from identity theft.
How Credit Works
What is a Credit Score?
Your credit score is a three-digit number that represents your creditworthiness to lenders. It ranges from 300 to 850, with higher scores indicating better credit health. This number is calculated based on your credit history and helps lenders decide whether to approve your applications for credit cards, loans, mortgages, and other financial products.
Credit scores are calculated by credit bureaus (Equifax, Experian, and TransUnion) using mathematical models, with FICO and VantageScore being the most common scoring systems. Your score directly impacts the interest rates you receive, the credit limits you are offered, and even your ability to rent an apartment or get certain jobs.
Payment History
35%Your track record of making on-time payments. Late payments, collections, and bankruptcies negatively impact this factor. Even one missed payment can significantly lower your score.
Credit Utilization
30%The percentage of available credit you are using. Experts recommend keeping utilization below 30%, with under 10% being ideal. High utilization suggests financial stress to lenders.
Length of Credit History
15%How long you have been using credit. Longer credit histories are generally better, as they provide more data about your borrowing behavior. Keep old accounts open to maintain history length.
Credit Mix
10%The variety of credit types you manage (credit cards, auto loans, mortgages, etc.). A diverse mix shows you can handle different types of credit responsibly.
New Credit Inquiries
10%Recent applications for new credit. Multiple hard inquiries in a short period can lower your score, as it may indicate financial distress. Rate shopping for mortgages or auto loans within 14-45 days counts as one inquiry.
Why Your Credit Score Matters
Your credit score affects nearly every major financial decision in your life. A higher score can save you tens of thousands of dollars over your lifetime through lower interest rates on mortgages, auto loans, and credit cards. For example, on a $300,000 mortgage, the difference between excellent and poor credit could mean paying $100,000 more in interest over 30 years.
Beyond loans, your credit score impacts insurance premiums, security deposits for utilities and rentals, and even employment opportunities in certain industries. Landlords check credit scores before approving rental applications, and some employers review credit reports as part of their hiring process, especially for positions involving financial responsibility.
Credit Repair Fundamentals
What is Credit Repair?
Credit repair is the process of improving your credit score by addressing negative items on your credit report and building positive credit history. This can involve disputing errors, negotiating with creditors, paying off debts strategically, and establishing healthy credit habits.
Under the Fair Credit Reporting Act (FCRA), you have the right to dispute any inaccurate, incomplete, or unverifiable information on your credit reports. Credit bureaus must investigate your disputes within 30 days and remove items they cannot verify. This legal protection is the foundation of effective credit repair.
- •Accounts that don't belong to you - Identity theft or mixed files with someone who has a similar name
- •Incorrect payment status - Payments marked late when they were on time, or accounts showing as open when they are closed
- •Wrong account balances - Showing higher balances than actual, affecting your credit utilization ratio
- •Duplicate accounts - The same debt listed multiple times, artificially inflating your debt load
- •Outdated information - Negative items older than 7 years (10 years for bankruptcies) that should have been removed
- •Incorrect personal information - Wrong addresses, employers, or name variations that could indicate mixed files
The Credit Repair Process
Request free copies from all three credit bureaus at AnnualCreditReport.com. Review each report carefully, as they may contain different information. Look for errors, outdated items, and accounts you don't recognize.
Document every error, inaccuracy, or questionable item. Take notes on dates, amounts, and account numbers. Prioritize items that have the biggest impact on your score, such as late payments, collections, and charge-offs.
File formal disputes with credit bureaus in writing, clearly explaining the error and providing supporting documentation. Send letters via certified mail with return receipt to create a paper trail. Bureaus must investigate within 30 days.
Contact original creditors to negotiate payment plans, settlements, or goodwill deletions. Pay-for-delete agreements can remove negative items in exchange for payment. Goodwill letters request removal of late payments if you have since established good payment history.
While removing negative items, simultaneously build positive credit history. Make all payments on time, keep credit utilization low, and consider becoming an authorized user on someone else's account with good payment history. Secured credit cards can help rebuild credit safely.
Identity Theft Protection
What is Identity Theft?
Identity theft occurs when someone uses your personal information without permission to commit fraud or other crimes. This can include opening credit accounts, filing tax returns, obtaining medical services, or making purchases in your name. The consequences can be devastating, affecting your credit score, finances, and even your ability to get a job or rent an apartment.
According to the Federal Trade Commission, millions of Americans fall victim to identity theft each year, with financial losses totaling billions of dollars. The average victim spends months resolving the issues and may face years of credit damage. Early detection and prevention are crucial to protecting yourself.
- •Unexplained withdrawals from your bank account or charges on your credit cards
- •Bills or statements for accounts you didn't open arriving in your mail
- •Calls from debt collectors about debts that aren't yours
- •Unexpected denial of credit applications despite good credit history
- •Medical bills for services you didn't receive or insurance claims you didn't file
- •IRS notification that more than one tax return was filed in your name
- •Missing mail or unexpected changes to your mailing address
- •Accounts or credit inquiries on your credit report that you don't recognize
How Identity Theft Happens
Hackers breach company databases containing customer information. Major breaches have exposed billions of records including Social Security numbers, credit card data, and personal details.
Fraudulent emails, texts, or phone calls trick you into revealing personal information. Scammers impersonate banks, government agencies, or legitimate companies to steal your data.
Thieves steal mail containing credit card offers, bank statements, tax documents, or checks. They can also file change-of-address forms to redirect your mail to their location.
Criminals install devices on ATMs or payment terminals to capture card information. They may also use hidden cameras to record PIN entries at compromised machines.
Protecting Yourself from Identity Theft
Monitor Your Credit Reports
Check your credit reports from all three bureaus at least annually. Consider using a credit monitoring service that alerts you to new accounts, inquiries, or changes to your credit file.
Use Strong, Unique Passwords
Create complex passwords for each account and use a password manager to keep track. Enable two-factor authentication whenever available for an extra layer of security.
Secure Your Personal Documents
Shred financial documents, credit card offers, and anything containing personal information before discarding. Store important documents in a secure location, and never carry your Social Security card unless absolutely necessary.
Be Cautious Online
Only shop on secure websites (look for "https" and a padlock icon). Avoid using public Wi-Fi for financial transactions. Be skeptical of unsolicited emails or calls requesting personal information.
Freeze Your Credit
Consider placing a security freeze on your credit reports with all three bureaus. This prevents new accounts from being opened in your name without your permission. Freezes are free and can be lifted temporarily when you need to apply for credit.
Review Financial Statements Regularly
Check bank and credit card statements frequently for unauthorized transactions. Report suspicious activity immediately. Set up account alerts to notify you of large transactions or unusual activity.
What to Do If You're a Victim
If you suspect identity theft, act immediately to minimize damage. The faster you respond, the easier it will be to resolve the issues and prevent further harm.
- 1.Place a fraud alert on your credit reports by contacting one of the three credit bureaus. This makes it harder for thieves to open new accounts in your name.
- 2.Report the theft to the Federal Trade Commission at IdentityTheft.gov and file a report with your local police department. Get copies of all reports for your records.
- 3.Close compromised accounts immediately. Contact banks, credit card companies, and any other affected institutions. Request new account numbers and passwords.
- 4.Dispute fraudulent charges with creditors and credit bureaus. Send written disputes via certified mail and keep copies of all correspondence.
- 5.Consider a credit freeze to prevent new accounts from being opened. You can lift the freeze temporarily when you need to apply for credit legitimately.
- 6.Document everything - keep detailed records of all conversations, letters, and actions taken. This documentation will be crucial for resolving disputes and recovering your identity.