Identity Theft and Credit Scoring: What You Should Know

More than 27 million Americans, including thousands of Texans, have been victims of identity theft. Identity thieves can use your personal information to make purchases on your credit cards, withdraw money from your bank accounts, obtain new credit cards, and conduct other financial transactions in your name. Because of the nature of the crime, you may not realize that your identity has been stolen until your credit is in shambles. Rebuilding good credit in the aftermath of identity theft can take months or years.

Identity theft can impact you as an insurance consumer because insurers often use an individual´s credit score to determine whether to accept an applicant for insurance and to set an individual´s rates. The Texas Insurance Code, however, requires companies selling personal lines of insurance to make reasonable exceptions upon request to rates, rating classifications, and underwriting rules for an applicant or policyholder whose credit information has been directly influenced by a catastrophic illness or injury; by the death of a spouse, child, or parent; by temporary loss of employment; by divorce; or by identity theft. Personal lines of insurance include automobile insurance, homeowners and other residential property insurance, and noncommercial insurance policies covering boats, personal watercraft, snowmobiles, and recreational vehicles.

The Texas Department of Insurance (TDI) has issued a Bulletin urging insurers to avoid placing unreasonable burdens or hardship on victims of identity theft. You may view a copy of the bulletin on the TDI website.

Identity theft warning signs

It´s important that you act quickly if you suspect that you´ve been the victim of identity theft. Following are common warning signs:

• You receive bills from a credit account you did not open.
• You see unauthorized charges on your credit card bill, long distance bill, or bank statement.
• You are contacted by a collection agency regarding a debt you did not incur.
• Bank and credit billing statements don´t arrive on time.
• Your credit report shows accounts or inquiries you did not authorize.
• You are turned down for insurance or notified of a rate increase, or are refused a credit card, loan, mortgage, or other form of credit because of unauthorized debt on your credit report.
• A business or company you do business with notifies you that personal information about you may have been inadvertently disclosed to other parties or fraudulently obtained.

What you should do

If you believe you´ve been the victim of identity theft:

• File a police report with your local law enforcement agency and keep a copy of the report. Many banks and credit agencies require a police report before they will acknowledge that a theft has occurred.
• Contact the three primary credit reporting bureaus to have a security alert or freeze placed on your report.
• Request a copy of your credit report and review it for unauthorized account activity. Continue to review your credit report periodically to verify its accuracy.
• Report unauthorized charges and accounts to the appropriate creditors and credit bureaus immediately by phone and in writing. Cancel the accounts.
• If your wallet, purse, or checkbook is lost or stolen, immediately cancel your credit and debit cards and get replacements. Contact your bank and stop payment on all lost or stolen checks.
• If you´re notified by a business that your personal information may have been fraudulently obtained by another party, contact one of the credit bureaus as soon as possible and ask that a fraud alert be placed on your account.

When you report fraud to one credit bureau, that report will automatically be sent to the other two agencies. Each company will then place a fraud alert on your account and send you a copy of your credit report for review. It´s a good idea to review your credit report annually to make sure the information on it is accurate and to monitor for unauthorized activity. The three primary credit bureaus are listed below:

Notify Your Insurance Company

Personal lines insurance companies must make reasonable exceptions upon request to victims of ID theft when deciding whether to issue coverage and to set rates. Therefore, it´s important that you notify your insurance company in writing if your identity has been stolen. You have the right to file a formal complaint with TDI if you believe a personal lines insurer has denied you coverage or charged you a higher rate because your credit score was negatively impacted as a result of ID theft. You may also file a complaint if you believe an insurance company has failed to make reasonable exceptions as required by the Texas Insurance Code. You may file a complaint with TDI in a variety of ways:

• by completing the online complaint form
• by e-mail at ConsumerProtection@tdi.state.tx.us
• by fax at 512-475-1771
• by mail at Texas Department of Insurance
  Consumer Protection Program
  P.O. Box 149091
  Austin, TX 78714-9091

For more information about identity theft, contact the Office of the Texas Attorney General or the Federal Trade Commission (FTC). The FTC provides information and helps accepts consumer complaints regarding identify theft nationwide

Office of the Texas Attorney General
1-800-621-0508
www.oag.state.tx.us

Federal Trade Commission
Dallas Office (serves all of Texas)
877-438-4338
www.consumer.gov/idtheft/

For more information contact: ConsumerProtection@tdi.state.tx.us