3 Long-Lasting Financial Effects of Identity Theft
Written by
Heather Taylor
Edited by
Gary Dudak
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Identity theft takes a significant emotional, physical, social and financial toll on its victims. In GOBankingRates’ Keep Your Money Safe 2023 survey of 1,141 Americans, 58% of overall respondents said the impact of identity theft is catastrophic and can easily destroy a person’s life. Another 20% of respondents surveyed said they did not know the full impact of identity theft.
For those who don’t fully understand, here are three long-lasting financial effects of identity theft.
Restoring Credit
When fraudsters steal personal information, like your credit card, the theft can result in damages to your credit score.
According to LifeLock, some of the lasting effects victims may experience include disputing an identity thief’s activity in their credit files and working to restore credit into good standing again. This is a process that can take some time, but is essential to do because restoring good credit is critical for reaching milestones like homeownership and saving money on different types of insurance.
Impact on Future Employment
If you want to move up the career ladder and earn more money in the future, being the victim of identity theft has the potential to negatively disrupt your employment plans.Â
LifeLock uses the example of a situation where someone who has stolen your identity starts to commit crimes in your name. If you’re applying for a job and consenting to a background check, the potential employer may notice there’s a criminal record. Even if you are able to clear up the confusion and clear your name, it’s possible you may not receive a job offer if the employer has reservations as a result of what they found in the background check.
Loss of Income
Shashwat Pradhan, lead product manager for LifeLock, said another major negative financial effect of identity theft is the loss of income. For those with low incomes, being a victim of identity theft can jeopardize basic needs such as being able to pay for bills and housing on time. Other financial impacts, Pradhan said, can include time out of work, traveling expenses and replacement of documents.
Fortunately, there are ways to help prevent these identity theft issues. A few recommendations from Pradhan include requesting and reviewing your credit report on a regular basis, locking your credit reports, setting up fraud alerts, creating unique passwords and keeping your Identity documents safe.
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