The Impact of Identity Theft

Identity theft is a serious crime that involves the theft and use of an individual's personal information, credit and financial accounts. The Federal Trade Commission reports that 8.3 million U.S. citizens were victims of identity theft in 2005 and that these figures increased by 22 percent by 2007. Protecting yourself from identity theft is critical, as its impact can be devastating to your credit and your mental well-being.

Emotional Impact

Identity theft can have a great emotional impact on its victims, most of whom are unaware of how or where the criminal obtained their personal information. Many people find themselves feeling vulnerable, angry, depressed and stressed when recovering from the theft---so much so that identity theft support groups have started up all over the country. The groups help individuals deal with the emotional side of the theft and help them move forward with their lives.

Credit Impact

You credit report and score can be greatly affected by identity theft. Although the law protects you from being financially accountable for the fraud committed in your name, your credit can be affected before you even realize you're a victim. To correct the credit information, you must contact the credit reporting agencies and any business where fraudulent accounts were opened. You must continue to monitor your reports closely for at least 12 months to ensure that the fraud has ceased.

Financing

Getting financing for new purchases can be difficult after an identity theft. If you have followed the appropriate procedures with the credit reporting agencies, a theft flag will be attached to your reports. When applying for new accounts, you may be required to provide additional information to prove that you are, in fact, the person you claim to be. While this is for your protection, many of the conveniences extended to you in the past will no longer apply. Such conveniences include quick credit approvals and online access to credit decisions.

Driver's License

Most victims of identity theft are so concerned about the impact on their credit that they forget the identity thief also might be using their driver's license and other forms of ID. Some criminals completely assume their victim's identity by obtaining driver's licenses and identification with new pictures and information. If this happens to you, you may find that you have outstanding tickets and criminal complaints resulting from the fraud. Having your passport stolen can even make it hard to prove your citizenship.

Overall Economy

Identity theft has had a dramatic impact on the country's economy. Individuals and businesses are affected by identity theft. The Federal Trade Commission estimates that businesses have lost more than $50 billion due to this type of fraud. In addition, the FTC estimates that businesses have spent more than $1.5 billion in efforts to avoid losses and resolve identity theft consequences. These business losses have resulted in lost jobs and an overall decline in financial stability.