Someone made a loan in your name - now what?

Identity theft has different faces. From credit cards to student loans, thieves can open various forms of credit in your name and destroy your credit history and financial standing.

If this happens to you, recovery from the situation can be difficult and time consuming. But you can work things out.

If someone takes out a loan in your name, it is important to act immediately to prevent further damage to your credit. Take the following steps to protect yourself and eliminate fraudulent accounts.

Someone made a loan in your name - now what?
Someone made a loan in your name - now what?


1. File a police complaint

The first thing to do is file a complaint with your local police department. You may be able to do this online. In many cases, you will need to file a police report documenting the theft in order for lenders to remove fraudulent loans from your account.

2. Contact the lender

If someone takes out a loan or opens a credit card in your name, contact the lender or credit card company directly to notify them of the fraudulent account and have it removed from your credit report. For credit cards and even personal loans, the issue can usually be resolved quickly.

When it comes to student loans, identity theft can have serious consequences for the victim. Failure to pay your student loan can result in wage foreclosure, driver’s license suspension, or government forfeiture of your tax refund – so it is imperative that you stop any fraudulent activity and get a prompt payment of the loan.

Generally, you should contact the lender who issued the student loan and provide them with the police report. The lender will also ask you to complete an identity theft statement. While your release application is being reviewed, you are not required to make any payments.

If you have private student loans, the process is similar. Each lender has its own procedures for dealing with student loan identity theft. However, you will usually be required to provide a police report as evidence, and the lender will investigate the matter.

3. Notify the school, if necessary

If someone took out student loans on your behalf, contact the institution the thief used to obtain the loans. Contact the financial aid department or registry office and explain that a student at the institution has taken out loans on your behalf. They can flag the account in their system and prevent anyone from taking further loans with your information.

4. Dispute the errors with your credit reporting agency

When you find evidence of fraudulent activity, you should dispute the errors with your credit reporting agency. You should contact them and provide evidence, such as your police report or a letter from the lender acknowledging the existence of identity theft. Once the credit reporting agency has this information, it can remove the accounts from your credit file.

If your credit rating has been affected because thieves defaulted on your loans, removing them can help improve your rating. It may take weeks or even months for your score to fully recover, but eventually it will return to its previous level.

5. Place a fraud alert or freeze your credit report

As soon as you know that you have been the victim of a fraudulent loan, place a fraud alert on your credit file with your credit reporting agency.

When you place a fraud alert on your account, potential creditors or lenders get a notification when they check your credit. The alert prompts them to take additional steps to verify your identity before extending a loan or form of credit in your name.

In some cases, it may make sense to freeze your credit. With a credit freeze, creditors cannot view your credit report or grant you new credit unless you remove the freeze.

6. Check your credit report regularly

Finally, check your credit report regularly to make sure no new accounts have been opened in your name. You can request a free report from your credit reporting agency once a year. You can arrange the reports in stages so that you get a report every four months, allowing you to closely monitor account activity throughout the year.

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