Identity Theft’s Impact on Your Credit Score


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Identity theft is a crime that has a substantial impact on the victim. If you experience identity theft, the consequences can have rippling effects that may follow you for the rest of your life.

According to the Insurance Information Institute, identity theft is unfortunately a fairly common type of crime. The state of Florida reported the highest number of complaints at 38,982 in 2014. The top five states for cybercrime in 2014 that led to identity theft included:

  • California
  • Florida
  • Texas
  • New York
  • Pennsylvania

Awareness of the crime and knowing how to react will help you protect yourself against the repercussions of identity theft.

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5 Things You Need to Know About Credit

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Most people know that a credit score is important for a variety of reasons. From being able to purchase a car to applying for a home loan, your credit score can have a tremendous impact on your life. As a result, your financial history is assessed and scrutinized a great deal.

To ensure you continue down a road toward healthy credit and monetary success, here are five things you should know about: 

  1. The difference between credit reports and credit scores

One of the most important things to understand about credit is the difference between a credit score and a credit report. The score that’s evaluated by lenders is calculated using the information present on your credit reports. Your report is comprised of:

  • Debt collection accounts
  • Public records
  • Frequency of credit application
  • Credit accounts

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Why don’t credit reports from different bureaus share the same score?

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If you have ever compared your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion), you probably noticed that they are not identical. Items that appear on one or two credit reports may not appear on the others. This is because the credit bureaus are separate entities that operate independently of one another. Creditors that report to one bureau may choose not to report to the other two bureaus. Some creditors may report updates to different bureaus at different times, or the bureaus may choose to update their files at different times, resulting in differences between credit reports.

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How Do Student Loans Affect My Credit Utilization?

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Debt utilization is a vital part of credit scoring and financial health. Also known as credit utilization, it accounts for 30 percent of your credit score, measuring your total debt compared with total credit limit. For example, suppose you have a credit card with a $10,000 limit and a $5,500 balance. Here’s how your ratio is calculated:

$5,500 balance/$10,000 limit=0.55 x 100 percent = 55% ratio

Consumers with FICO scores of 800 and above maintain utilization ratios of 25 percent or less. Low debt equals low risk and greater potential for credit score improvement.

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Quiz: Does Bad Credit Rule Your Life?

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The effects of bad credit can creep in slowly, causing damage, emotional stress and even legal trouble. Does bad credit rule your life? Take the quiz to find out.

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