Identity theft is a real problem with long-lasting consequences. Over 15.4 million people were victims of identity theft in 2016, up 16 percent from the previous year, according to a Javelin Strategy & Research study.
Identity theft can take many forms. Criminals can open up credit cards in your name, apply for car loans, and even claim your tax refund. Thieves also can use your information to take out student loans in your name, leaving you on the hook for thousands of dollars.
What to do if you’re a victim of student loan identity theft
You can find out that you’re the victim of identity theft in many ways. You might get a letter from a loan servicer saying a loan is past due, or you could see a new account pop up on your credit report.
Finding fraudulent activity is scary, but it’s important that you take action right away. If you don’t, your credit score could be damaged, and you might struggle to find lenders willing to work with you going forward. Worse, creditors can come after you for payments on the fraudulent accounts, including student loans you didn’t take out.
If you’re a victim of student loan identity theft, follow these five steps.
1. Place a fraud alert or credit freeze on your credit report
As soon as you find evidence of identity theft, contact the three credit reporting agencies — Experian, Equifax, and TransUnion — to request a fraud alert or credit freeze.
A fraud alert prevents new accounts from being opened in your name. You can apply for credit or a loan if you’ve placed a fraud alert, but lenders are required to take extra measures to verify your identity.
A credit freeze prevents potential lenders from accessing your information. The only way to open a new account is to remove the freeze. Although a freeze provides more security, it also can make life more difficult for you. There’s often a delay of several days if you need to unfreeze your account to apply for credit, which can make it harder to get a loan or line of credit.
2. Contact the authorities
Next, you need to contact the relevant authorities. Many creditors will require a police report to clear you of responsibility for the debt. Bring a copy of your credit report or other evidence of an account being opened in your name and go to the local police station to file a report.
You also should report the theft to the Federal Trade Commission (FTC). The FTC will help you craft
a recovery plan, and it will even prefill forms and letters for you to send to creditors. This recovery plan can help you navigate a complex process and track your progress.
3. Dispute the errors on your credit report
Request a credit report from each of the three credit reporting agencies, as the information listed can vary. You can do so when you place your fraud alert. Once you have the reports, contact each agency to dispute the fraudulent accounts.
Whether the thief took out federal or private student loans, you should reach out to the lender to dispute the charges.
If the thief took out federal student loans in your name, you might be eligible for a discharge that would eliminate 100 percent of the fraudulent loans.
For private student loans, each lender has its own process for handling identity theft. To start the process, contact the lender and send it a copy of the police report you filed.
4. Contact the school that opened the loan
Once you find out about the fraudulent student loan, contact the school that opened the loan in the first place. Alert it to the fact that you didn’t take out the loan and provide a copy of the police report if necessary.
The school should close the loan right away. Ask for a letter verifying the loan’s closure for your records.
5. Report the problem to the Department of Education
Finally, you should report the fraudulent activity to the Department of Education. You can do so by calling the Office of Inspector General hotline at 1-800-MIS-USED (1-800-647-8733). Or you can file a complaint online.
Preventing identity theft
Identity theft — including student loan identity theft — is an all-too-common problem. The best way to minimize the damage is to diligently review your credit report and dispute the charges as soon as possible. You can get a free credit report from each credit reporting agency at AnnualCreditReport.com.
If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14.
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