Filing it will allow credit bureaus to repair damage from parental identity theft
Dear Opening Credits,
A friend of mine is going through a tough time. Her mom took credit cards out in her name and was late paying three of them, but is now paying them. My friend wants to fix her credit score, but she does not want to press charges on her mom. Her mother is paying off the debt and has one card paid off. How can this be fixed without involving the police? — Laura
There’s nothing quite so horrible as being betrayed by a close family member — particularly a parent. As you seem to know, this mother’s actions were criminal. When she applied for and then received credit cards using another person’s personal information, she committed identity theft — a federal offense. Then when she charged with those cards, those transactions were fraudulent.
I hope you’re dander is up, because mine sure is. Mommy dearest did a truly rotten thing, and she should not get away with it. If I were you, I’d urge your friend to file a police report for identity theft now. Chances are nothing would happen to the mother, as identity theft is usually considered a low-priority crime. Court cases are rare and besides, she’s already paying the debt back.
However, reporting it to the authorities would give your friend a police report number. With that in hand, she should be able to undo the credit report damage. She could try without it, but that report number provides key credibility to her claim.
According to Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse, a nonprofit organization that educates individuals on financial privacy, identity theft victims don’t have to report the crime. In many cases, when relatives are involved, it’s settled within the family “without law enforcement or civil litigation,” says Stephens. But removing the data may be difficult or impossible without a police report. “If she knew about it and failed to notify the issuers, she has some culpability,” says Stephens. “But if she didn’t know about it until now and reports it to law enforcement, the issuers should remove it.”
If she reconsiders filing a police report, have her contact all the credit issuers to explain that the accounts were opened fraudulently. She’ll need to work with them individually, and ask that they stop reporting the accounts to her credit file. If they don’t, she must dispute the accounts with the three biggest credit reporting agencies — TransUnion, Equifax and Experian — which will contact the credit card issuers. They have 30 days to investigate, and if all goes as it should, the accounts will be purged from her credit reports.
Otherwise, without that report, she may have to just deal with the situation on her own. She can try calling the issuers and reporting the fraud to see if the they will stop reporting the accounts. If she is unsuccessful getting the issuers to comply without a police report, she’ll have to closely monitor the repayment situation with her mom. Once each card is paid off, the card should be canceled. The late payment notations will remain on her credit report for seven years, but will become less important as more positive information is reported.
Regarding your friend’s credit score, the accounts began showing up on her credit reports the day they were opened, and all the activity since then has been listed. Credit scores such as the FICO are developed from the information on these reports. Payment history — whether payments are made on time — is the most critical factor. Delinquencies that occurred within the past couple of years have an intense impact, so she is definitely being downgraded. If the debt had been large, especially if it was at or close to the credit limit, that too has hurt her scores because credit utilization is the next weightiest scoring factor. Worse, if your friend only has this activity on her file, she’s taking a super hard hit, since nothing positive is diluting those negatives.
Be aware that removing accounts from a credit file can result in a credit score change, and possibly not in your friend’s favor. Right now her score is being calculated based on these three accounts being listed, and even with the recorded late pays, they’ve added history to her file. One is paid off and the others are in process, and that’s positive. When they’re suddenly eliminated, the scores may dip. If so, she’ll need to work on getting her own accounts and using them well over the long term to build up her numbers.
Adding a fraud alert to her credit files is crucial too. Once done, a lender will have to take steps to verify your friend’s identity before granting a new loan or credit card, or increasing an existing credit line. The initial alert lasts for 90 days and it’s renewable, but with the police report she can have an extended alert that remains for seven years. A credit freeze is also an option, and it’s stronger — lenders won’t be able to access her credit file at all unless she defrosts it, but she may not want to go that far.
You’re a good friend for reaching out on her behalf, Laura. I hope she recognizes that.