Take these steps to repair your credit after ID theft by parent
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
I'm 19 and about to go to college and have been trying to educate
myself about getting good credit. So I pulled my free credit reports and found
out I already have miserable credit. I spoke to my mom, and she got all
squirrely. I called my dad -- they're recently divorced -- and he basically
said mom had opened the accounts after the divorce when things were tough
financially. So, great, my mom stole my identity. Obviously, I don't want to
call the cops on her, but what do I do? Any help would be appreciated. -- Tina
really hate to hear a story like this. It breaks my heart. Sadly, I've heard it
many times before, so if company gives you some solace, please take it. Your
mother used dreadfully bad judgment and what she did was absolutely wrong.
However, my guess is that she probably didn't steal your identity, take out
cards in your name and wreck your credit maliciously. More likely, it was
because she was desperate and in some kind of pressing financial position
during the divorce. Mind that I am no way excusing her actions -- I'm just
letting you know that, in my experience, when parents do things like this, it's
usually because they just aren't thinking right at the time.
you can recover from the crime -- yes, what she did is illegal whether or not
you press charges -- and the damage it has caused.
first step is to get the outstanding debts paid. You did not charge on the
fraudulently opened credit cards, your mom did, and she's the one who should
cough up the money. I would like you to talk to her. So far she hasn't been
mature enough to approach you and explain what happened, even now that she
knows that you know the truth. She's probably profoundly ashamed of herself. No
matter, a discussion about how she can make financial amends is in order.
Paying these accounts yourself should not be your responsibility. If she
doesn't have the means to pay, ask your father to step in and help out.
has been badly broken, so if you don't think she'll make good on the debt, then
contact the credit card companies and explain to them exactly what happened. They've
heard this story before, believe me. Tell them that you want to handle this
problem outside of the court system and ask how they can help. Make sure the
accounts are closed, too, and if they aren't, close them.
debt has migrated over to a collection agency, however, talking won't do a lot
of good. Collectors typically don't accept installment payments, so once you
have the cash -- perhaps from your mom or dad -- pay the cards off in
full. As time passes, the delinquencies
and charge-offs will have less and less impact on your credit history and
score. After seven years, all evidence of the problem will come off your
speaking of your reports, I also want you to flag them, which can help against
any future identity theft issues, and add a statement
to them that explains what
happened. This is your right under the Fair Credit Reporting Act
. In fewer than
100 words, summarize the situation: something like, "My mother opened and used
___ accounts without my knowledge or permission. She charged them up and didn't
pay. When I found out, I immediately took control and repaid the debts..." I'm
afraid this statement won't affect your credit scores
, but it will pop up each
time someone pulls your report. It could make a big difference to an
understanding landlord or employer.
you will be busy with college life, but perhaps you'll be working a bit, too.
If so, see if you can get a credit card in your name, so you can counter the
ugly past with a beautiful present and future. Charge small amounts, pay on
time and keep debt at zero. Do so, and you just may graduate with excellent
credit despite the rough beginning. In the meantime, if you're worried about
student loans and grants, fret not -- credit scores are not eligibility factors
for federally guaranteed loans. Finally, I hope you can salvage your
relationship with your mom.
See related: 10 tips for dealing with debt collection, collectors, Key federal laws that protect credit cardholders, 10 things you must know about credit scores and reports, Add a 100-word statement to your credit report
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: July 21, 2010