Repair your credit
Step four to spotless credit: Recovering from ID theft is a necessary hassle.
By Jean Chatzky, MONEY Magazine editor-at-large


NEW YORK (MONEY Magazine) - Below you'll find the right way to recover from ID theft -- or clean up your errors. It can be time-consuming, but it's the only way to clear your good name to creditors.

When you suspect ID theft, call a credit bureau first

If you lose your wallet or see signs of ID theft (an unfamiliar account on your credit report, say), first contact one of the three credit agencies and ask to have a 90-day fraud alert placed on your report (Equifax: 800-525-6285; Experian: 888-397-3742; and TransUnion: 800-680-7289).

Freeze out ID thieves
Even better than a fraud alert is a full freeze on your credit report, which prevents anyone from opening an account without your permission. Unfortunately, you can do this only in these 12 states.
   
California Louisiana North Carolina 
Colorado Maine Texas [1] 
Connecticut Nevada Vermont [1] 
Illinois [1]  New Jersey Washington [1] 
 Note: [1] ID theft victims only; in Washington, also for security breaches.
 Source: U.S. Public Research Group.

This lets creditors know that your identity may have been compromised and that they need to be cautious about new loan applications. One call will trigger an alert at all three bureaus.

Next, call your creditors. Close accounts that have been tampered with or opened in your name, and challenge fraudulent charges. Follow up with certified letters. Many lenders have forms, or use the Federal Trade Commission's ID theft affidavit. File a police report, which will let you extend a fraud alert to seven years.

To bounce back from mistakes, become a model citizen

The best way to undo the damage caused by your own bad behavior is to pay bills on time, whittle away at balances on cards that are maxed out and resist opening new accounts.

Don't turn down help

If you are in deeper trouble, consider credit counseling. Yes, repaying debts through an agency doesn't look good on your credit report, but it can be less damaging than bankruptcy.

The industry has been plagued by conflict-of-interest problems, so start with the government's list of approved counselors or the National Foundation for Credit Counseling.

The secret of 24 months

Bankruptcy stays on your credit report for seven to 10 years, late payments for seven. But you can vastly improve your credit within two years. Creditors consider your recent behavior a much better indicator of your creditworthiness than what you did in the past. Cleaning up your act today can mean lower interest rates by the time you ring in 2008.

___________________

For more on protecting your credit and your identity online, click here for CNNMoney.com's Special Report, "Mission: Security." Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.