How a Stolen Phone or Wallet Could Lead to Needing a Credit Fix

There are many things that a consumer may do in dealing with his or her credit that would necessitate a credit fix, and some may even be out of that person’s control. Such is the case when one loses a wallet or cellphone and does not act quickly enough to deal with the potential fallout.

Losing a wallet or phone can be a costly event for any consumer. A smartphone can cost hundreds of dollars or more, and a wallet can be filled with cash, credit and debit cards, all of which can be extremely problematic if they fall into the wrong hands. But moreover, what may often happen with a stolen wallet or phone is that the sensitive personal and financial information contained on them can be used to significantly endanger one’s credit, and it is for this reason that those who suffer such a loss must go about alerting all necessary financial institutions to the incident as soon as possible after it is discovered.

How a lost wallet can damage credit

The most obvious way in which a person whose wallet is lost or stolen can have their credit endangered is if a criminal uses the credit cards in it to make a number of fraudulent purchases, adding as much as several thousand dollars to a victim’s debt in a relatively short period of time. This can be an issue because 30 percent of one’s credit score – the second-largest single consideration that goes into determining such a rating – is made up of what is known as “credit utilization ratio.”

That means, essentially, that the amount of debt being carried by a borrower is judged as a percentage of their total allowable limits. While the common belief is that lenders want borrowers to carry somewhat significant debts, the opposite is actually true; in general, the best way to maximize this portion of one’s score is to carry 30 percent or less of credit limits across all accounts (for instance, $3,000 in debt if maximums total $10,000). However, even a little bit of credit card fraud committed by someone who steals a wallet can obviously put this ratio out of order in relatively quick fashion, and thus, the best way to avoid such a problem is to report stolen cards to all lenders that issued them as soon as they’re noticed to have gone missing. The lenders will consequently cancel them and issue new ones, allowing theft victims to avoid the issues that could otherwise arise, and making any attempts by the thief to use the cards futile.

But another, potentially more significant problem that can come as a result of a stolen wallet is if consumers store vital identification documents in it. This can include their driver’s license or even Social Security card, because armed with the information gleaned from them, a thief may be able to use that data to commit a very different type of credit fraud that can potentially be far more harmful. For instance, with a name, address, and Social Security number criminals can find it relatively easy to apply for credit cards, and even loans, in their victims’ names, which is an issue that’s far more difficult to clear up.

What about stolen phones?

Some aspects of a stolen phone might potentially be as dangerous as a lost wallet, because these days, a large number of people store critical personal and financial information on these devices, often in relation to the apps they use. For example, someone might put their credit card number into their phone so that they can use it to make purchases of songs, movies and other media, or otherwise complete mobile shopping transactions. Often, these apps are protected with passwords, but people who do not have particularly strong ones might learn the hard way just how dangerous using a pet’s name or birthday in these instances can be. In other cases, people might put sensitive personal data on the phone for what they think is safe keeping, but can in reality lead to identity theft like the kind detailed above.

One great way to protect against this type of fraud is to password-protect the phone itself, using a series of totally random numbers or, in the case of Android phones, a pattern known only to the owner. This will help to safeguard any data stored on it, but just to be safe the financial institutions connected to the accounts stored on such a device should likewise be contacted if it’s stolen.

And just to ensure no personal data has been used to open new lines of credit without a person’s knowledge, it’s wise to regularly check credit reports to ensure no unfair markings appear. If any are discovered, working with a credit repair company can help put these issues to rights.

Posted in Credit Repair
Learn how it works

Questions about credit repair?

Chat with an expert: 1-800-255-0263

Facebook Twitter LinkedIn