Credit Smart

ID theft means surprise loan denial


The bank turned down his loan application due to his mortgage and five credit cards. Since he doesn’t have any cards and rents a room, it’s ID theft

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Question for the expert

Dear Credit Wise,
So I wanted to take out a loan and I qualified but at the last minute they turned me down because of the amount of credit card payments I owe. But I  never opened any credit cards and now they are saying I have a mortgage. Sadly, I don’t. I live in a room in someone’s house and pay rent so how am I to deal  with all this? Is it right for me accept it and pay the cards I don’t have? Who  should I tell about this? I am 23 and never  even had a bank account either. Now it looks like I’m in debt to five credit cards and a mortgage that I don’t have, that I never opened and I don’t know what to  do. How should I handle this? — Sarralin


Answer for the expert

Dear Sarralin,
It would appear that you are the victim of identity theft. Sadly, one of the side effects of identity theft is just what you experienced — you were turned down for a loan. The company that turned you down should have sent you a notice regarding the reason you were disqualified. This notice includes the name of the credit reporting agency from which the information was obtained.

The first thing you should do is contact that credit reporting agency — Equifax, Experian or TransUnion — let them know you’ve been an identity theft victim and request a copy of your credit report. It is also important to contact the other two agencies as well because this erroneous information could be in one, two or all three of the be reporting agencies files. All three agencies are required to send you this report for free. Once you have received your report(s), check to be sure that none of the accounts listed do in fact belong to you. If you find that one or more account is accurate, you will need to come up with a repayment plan and contact the creditor(s) you owe.

However, if none of the accounts belong to you, a letter of dispute should be written and sent to the credit reporting agency or agencies that have the erroneous information. In your letter, you will need to state the facts clearly, explaining why each account does not belong to you (you never applied for or received a credit card, and you never applied for a mortgage). Make copies of your credit report and circle those items for clarification, enclose the copy with your letter and mail it certified, return-receipt requested. Be sure to keep copies for yourself.

Once your dispute has been filed, each credit bureau must investigate the items being disputed within 30 days of notification. Once their investigation is complete and if there are indeed mistakes on your credit report, that agency is required to remove those items and notify the other two reporting agencies of the errors.While it may seem overkill to address all three bureaus given each is required to report to the other, I would still recommend addressing them individually.

If none of these accounts do in fact belong to you, certainly do not begin paying on them. Paying anything could signal the companies that you agree that you owe them the money and will start the clock running again on credit reporting, as well as on creditor calls if you fail to continue to make payments.

See the Federal Trade Commission’s report, “Repairing your credit after identity theft,” for more details about fighting back from ID theft.

On another note, your true credit file may be thin; you might consider opening a low-limit secured credit card, which is secured with funds you deposit, in order to begin building positive credit in your name. As you use the card, be sure you make all your payments on time, every time because on-time payments account for a large part of your credit score. Once this is all cleared up, you should make a point to check your credit reports at least on an annual basis at  You are entitled to a free copy of your credit report every year from each of the credit reporting bureaus.

Be wise with your credit!

See related: Put your credit report on ice with a credit freeze

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