Identity theft is a huge problem that can cause a great deal of headaches. Sadly, people don’t always take caution and try their best to avoid this costly and annoying issue. With a proactive approach, you can avoid these four damaging effects of identity theft.
Financial Problems
First and foremost, when someone steals your identity and opens credit cards or loan accounts in your name, you will face financial problems. Since you won’t always know when a person opens up an account in your name, you will face past-due bills and watch your credit score plummet. When this happens, your interest rates will rise. In fact, if your score suffers, your old interest rates will disappear and you can end up paying nearly 30 percent on your credit cards. Even if it’s not your fault, you will pay a serious financial penalty is someone steals your identity and opens credit in your name.
Strained Relationships
Since your credit score will drop and you will see unpaid bills pile up, you will strain your relationships with banks, credit unions, and other lending institutions. This is especially true when working with larger corporations that don’t necessarily know your identity was stolen. After the relationship is strained, not only will you struggle to find new credit cards and other loans but you may also lose the relationship permanently. Some banks and credit card companies don’t want to deal with customers who forget to make payments.
Legal problems
While you can fix legal problems related to identity theft, it will still take time out of your day and cause you unnecessary stress. If your bills pile up, you will face lawsuits and wage garnishments. You can head to court and clear your name, although it will still cost you money and time.
Lost Time
It takes a long time to clear your name and regain your credit score. You will need to talk on the phone to your current creditors and deal with credit reporting agencies. This can take dozens of hours and require you to send mail to people at multiple agencies and companies.
