Recovering From Identity Theft When Buying
Having your identity stolen can be an extremely challenging experience. Whether you’re the victim of a data breach, lost your wallet, or had your financial information stolen in some other way, recovering from identity theft can be stressful and time-consuming. But it can feel even more overwhelming if you’re trying to buy a house. Fortunately, there are steps you can take to repair the damage that has happened. Here’s what you need to know.
Check your credit reports
In some cases, you may not even know that you’ve been the victim of identity theft until you go to apply for a mortgage. Before you begin your house-hunting journey, get a copy of all three of your credit reports. Check them for errors or for signs that someone may have opened a line of credit in your name.
Contact companies where fraud happened
Next, you should contact the companies where the fraudulent activity occurred. Ask to speak with their fraud department and close any accounts associated with the fraud. Work to have charges removed and ask to get documentation about the fraud.
Once a criminal has some of your information, it is easier for them to access more of your accounts. For this reason, you should change the login and password for all of your accounts. This will prevent the criminals from striking again.
Report the fraud
If you discover that someone has stolen your identity, then you need to report it immediately to the Federal Trade Commission. You can report your identity theft at identitytheft.gov. You should also contact the credit bureaus to report the fraud. Use the documentation you were provided including the report from the FTC. You may also wish to file a police report.
Show your documentation to your lender
Just because you’ve been the victim of identity theft doesn’t mean you can’t buy a home. Mortgage lenders understand that identity theft happens. In fact, there were nearly 1.4 million reports of identity theft in 2020. Be prepared to show your documentation to the lender including your FTC report and a police report. You should also prepare a letter of explanation detailing the fraud.
Unfreeze your credit
When you report your fraud, your credit may be frozen. Once you’ve addressed the situation, you need to unfreeze your credit when you apply for a mortgage. Otherwise, underwriters will not be able to assess your application.
Ask for manual underwriting
When a lender evaluates your application, the underwriting process is often automated. Ask your lender about manual underwriting because of your specific situation. You will likely need to explain some of the findings, and when the underwriting is done manually you will have an opportunity to explain yourself.
Finally, your credit score may have taken a hit because of the identity theft. It can take time to have the fraud removed from your account, so your score may be lower than what it might otherwise be. That’s why it’s so important for you to shop around for a mortgage. Compare different lenders and their rates to make sure you’re getting the best deal under the circumstances.
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