What to Do If Someone Took Out a Loan in Your Name

Identity theft manifests in various ways, affecting everything from credit cards to student loans. Thieves may secure different types of credit using your personal information, potentially damaging your credit history and overall financial health.

Should you find yourself a victim of this crime, addressing the issue can be both challenging and time-intensive. However, it is possible to rectify the situation.

If a loan has been fraudulently opened in your name, it’s crucial to take immediate steps to mitigate any further harm to your credit. Follow these guidelines to safeguard yourself and eliminate any unauthorized accounts.

1. Report to the police

Your first step should be to file a report with your local police department. Many jurisdictions allow you to complete this online. Often, a police report is necessary for financial institutions to erase the fraudulent loans from your record. (See also: 9 Indications Your Identity Might Be Compromised)

2. Reach out to the lender

Next, if a loan or credit card has been fraudulently established in your name, make contact with the lender or credit card issuer. Inform them of the fraudulent account, and request its removal from your credit history. Issues with credit cards and most personal loans can generally be sorted out swiftly.

Identity theft related to student loans can have severe repercussions. Neglecting a student loan could result in wage garnishment, a suspended driver’s license, or the forfeiture of your tax refund by the government. Thus, it’s imperative to curb any fraudulent activity promptly and work towards discharging the fraudulent loans.

Typically, you’ll need to inform the lender associated with the student loan and supply them with your police report. They may also ask you to complete an identity theft form. While your discharge request is being reviewed, you won’t be accountable for making payments.

The process is similar for private student loans, although each lender may have their unique protocol for addressing such cases. Evidence such as a police report is usually required, and the lender will conduct an investigation.

3. Notify the educational institution if needed

If student loans were fraudulently taken out in your name, reach out to the school associated with those loans. Contact their financial aid or registrar’s office to explain the situation. They can monitor the account in their system and prevent additional loans from being taken out using your identity. (See also: Protecting Your Child Against Identity Theft)

4. Contest inaccuracies with credit bureaus

Upon finding fraudulent activity, you must contest the inaccuracies with each of the three credit bureaus: Experian, Equifax, and TransUnion. Reach out to each bureau and provide supporting documentation, like your police report or a letter from the lender confirming the identity theft. Once they have this information, they can remove the fraudulent accounts from your credit history.

If your credit score suffered due to defaults on these fraudulent loans, removing them can help restore your score. While recovery may take several weeks or even months, it is possible for the score to return to its former level. (See also: Stay Calm: Steps to Take If Your Identity Is Stolen)

5. Set up a fraud alert or credit freeze

As soon as you discover fraudulent loan activity, place a fraud alert on your credit report with one of the three credit bureaus. This can often be done online:

By setting a fraud alert, prospective creditors will receive a notice when they check your credit. This alert encourages them to take further steps to verify your identity before extending credit. (See also: Free Fraud Alerts on Your Credit Report)

In certain situations, freezing your credit may be advisable. A credit freeze prevents creditors from accessing your credit report or granting you new credit until the freeze is lifted.

6. Regularly monitor your credit report

Lastly, make it a habit to regularly review your credit report to confirm that no new accounts have been established in your name. You can obtain a free report from each of the three credit bureaus annually at AnnualCreditReport.com. Staggering these requests allows you to monitor your account activity more closely throughout the year. (See also: Understanding a Credit Report)