What to do if your credit score is affected by fraud

Your credit score is important when it comes to your finances. So, what happens if you’re affected by identity theft or mistakes – or you're refused credit? There are steps you can take to manage disputes and work to resolve issues in your credit report.

Falling victim to identity theft is an unsettling experience. If someone gets hold of your personal details for financial gain – like applying for a loan or credit in your name – it could also affect your credit rating.

If you believe your identity has been stolen then you should contact the bank, credit card company or organisation where the fraud has taken place to let them know immediately.

You can also report the incident to Action Fraud (Opens in new window)

You can then look at your credit report to see if it’s been affected:

• Get a copy of your credit report from each of the three main credit reference agencies (Equifax (Opens in new window)Experian (Opens in new window) and TransUnion (Opens in new window)) or use checkmyfile (Opens in new window)
• Review it to see if there have been any new searches or accounts that you haven't applied for
• Contact those banks or lenders directly and tell them about the fraud

Errors or fraud in your credit file can both unfairly hurt your credit score and could prevent you from getting a loan or credit card, and you might not even know if you didn't look for it. Fortunately, you can dispute errors or fraud directly with the CRA (credit reference agency). As soon as the issue has been corrected your score should recover quickly.

What is a Cifas warning?

Cifas is a fraud prevention service that lenders can use to place ‘markers’ on someone’s credit file when they think there's been a fraud attempt. Lenders are legally obliged to report these concerns.

The note on your credit report will say ‘victim of impersonation (Opens in new window)’ and will stay there for 13 months, acting as a notice to future lenders that you've been a victim of fraud or are vulnerable to becoming one. Having a victim Cifas marker doesn't affect your credit score, and won’t stop you from applying for loans and credit in the future, it's there to protect you.

If you have been a victim of fraud, you can pay for the Cifas protective registration service (Opens in new window) This places a warning flag against your details and alerts a lender that you may be vulnerable to fraud, making sure they carry out extra checks when assessing an application for credit in your name.

Why have I been refused credit?

Being refused credit can happen for several reasons, and legally a lender doesn't have to tell you why they've turned down your application.

It could be because of:

• suspected fraud on your file
• a low credit score or past missed payments, which could signal that you might not be able to keep up with repayments
• a mistake in your address or personal details on your credit report
• the lender’s credit policy – for example, you might earn less than the minimum amount required to qualify for that product

The good news is that the lender is required tell you which credit referencing agency they used to check your file. You can then check the report from that particular agency to see what caused the issue. If something looks wrong, write to the agency and request a correction, providing evidence.

There are several things you can do to improve your credit score.

How do I dispute something in my credit report?

Once you’ve reviewed your report, highlighted any issues and reported them to the referencing agency, they have 28 days to respond in agreement or state why they don't agree. During that time, they'll mark the issue in your file as ‘disputed’ to alert lenders who might be viewing your report.

If you can, go straight to the company you think is responsible for the incorrect entry in your credit report. They're often in the best position to resolve disputes, and credit agencies will remove or update information if the company concerned agrees to the change.

What is a notice of correction?

If you think anything in your credit report is misleading or needs explaining, (for example if you missed some payment deadlines because you weren’t working due to illness), you can ask the credit agencies to add a notice of correction in your file next to that entry.

This short statement (up to 200 words) lets you add more details to an entry in your report. Once it’s in place, any lender checking your report will see the note and should consider it when assessing an application from you.

Overall, it’s worth checking your credit report every year for any information that needs clarifying – checking it doesn't impact your score. Check it more often if you’ve been a victim of identity theft or are vulnerable to fraud.

Recommended reading

• Avoid fraudsters (Opens in new window)
• Look after your digital footprint (Opens in new window)
• Keep up to date on new scams by reading our articles on fraud and security (Opens in new window)