Don’t Let Student Loan Identity Theft Ruin Your Life
Note that the situation for many types of debt has changed due to the impact of the coronavirus outbreak and relief efforts from the government and others. This includes AnnualCreditReport.com offering free credit reports on a weekly basis, rather than one per year, until further notice.
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If someone steals your sensitive information, they could use your identity to borrow a student loan in your name. Fortunately, there are steps you can take to protect your credit if you’re the victim of student loan identity theft.
Student loan identity theft is a type of “new account fraud,” since it occurs when someone else takes out a student loan in your name.
This type of fraud can be even more difficult to resolve than existing account fraud (such as when someone makes a purchase using your credit card).
And unfortunately, new account fraud is on the rise. According to Consumer Affairs, new account fraud increased by 13% in recent years.
If you discover you’re the victim of student loan identity theft, act fast. If the fraudster defaults on their loans, your credit score is going to take the hit.
To protect your credit, here’s what you should do:
If you place a fraud alert on your credit file, you can ensure that no new credit is taken under your name. You can either do an initial security alert or an extended fraud victim alert for seven years.
You can place a fraud alert by contacting one of the three credit reporting bureaus (Experian, Equifax or TransUnion). Technically, one is then required to contact the others. However, you could also contact all three yourself using these numbers provided by the Consumer Financial Protection Bureau (CFPB).
It’s important to know that if you need to open new credit while you have an alert, you’ll be able to. These alerts require lenders to take additional steps to verify your identity before approving any new credit — they don’t stop all new credit entirely.
Once you place your fraud alert, you’ll get your credit report for free from all three bureaus. Review your reports and identify the accounts listed that you didn’t open.
Keep in mind you’re going to want to do this with all three bureaus’ reports, as information may vary from report to report. Keep track of all fraudulent accounts and which reports list them.
Once you know all of the accounts to dispute, begin the dispute process with each bureau that lists those accounts on their reports.
Next, create an Identity Theft Report with the FTC by following the steps on IdentityTheft.gov. This will get the ball rolling on recovery. You can also go to your local police, but you’ll have to bring your FTC Identity Theft Report, ID, proof of address and proof of the theft.
Since this is student loan identity theft, there’s a little more to do. The next step is to contact the school associated with the loan. After you explain what happened, ask them to close the loan and send you a letter verifying that it’s been done.
If the loan or loans are federal, you’ll also need to contact The Department of Education Office of the Inspector General and explain the situation. You can reach the hotline at 1-800-MIS-USED (1-800-647-8733).
By taking these steps, you may be able to have the fraudulent loan discharged.
If you’ve never been a victim of student loan identity theft, don’t let all of this scare you. There are steps you can take to protect yourself or, at the very least, act fast if something does happen：
Since there are three credit reporting bureaus and each one is required to give you a copy of your credit report annually, you can space them out and check your report three times per year.
By doing this, you’ll be able to quickly find new accounts you don’t recognize should you become victimized by fraud. Simply go to AnnualCreditReport.com to get your reports.
Maybe you had a roommate steal your mail or there was a data breach from somewhere that holds a great deal of your personal information. If this happens and you want to do more than just monitor your credit reports, place a fraud alert on your credit report.
Just know this will lead to more verification steps should you take out new lines of credit.
If you receive suspicious calls or debt collection letters, don’t ignore them just because you know you haven’t defaulted on your loans. This could be a sign that someone else had defaulted on theirs — in your name.
Anytime you see warning signs like this, obtain a new copy of your credit report. And if you see something that’s not yours, dispute it immediately.