What to Do if Your Parents Ruined Your Credit

Trying to repair bad credit because your parents stole your identity? Here are the steps you need to take.

Identity theft is a rapidly growing crime, and more identity thefts were reported in 2019 than in any other year. It's always difficult to discover a criminal has used your personal information. But nothing can compare to when the perpetrators are your own parents.

Parents usually already have all the information an identity thief would need, including your Social Security number, date of birth, and address. That makes it easy to open accounts in your name without your knowledge.

If you've recently found out that your parents committed identity theft and ruined your credit, you're likely going through a range of emotions. It's normal to feel stressed, frustrated, and betrayed. On a positive note, you can repair the damage to your credit score. You just need to follow the right plan.

What not to do

It's best to start with a couple of things you shouldn't do, even if it seems like they make sense:

• Don't make any payments on any fraudulent accounts your parents opened. This makes it more difficult to report the account isn't yours and get it removed from your credit report. The creditor could use that payment as evidence that it's your account.
• Don't wait around if your parents tell you that they'll pay back the debt. Paying off the debt may not be enough to rebuild your credit, especially if there were any missed payments. And if your parents stole your identity, you can't exactly trust them to follow through on a payment plan.

Now that you know what not to do, let's go over what you should do.

Review your credit history

To fix your credit, you need to know the extent of the damage. You can find out by requesting your credit reports from the three consumer credit bureaus: Equifax, Experian, and TransUnion. Credit reports from each credit bureau are available through AnnualCreditReport.com.

You're legally entitled to one free credit report from each bureau per year, but through April 2021, each bureau is offering free weekly reports.

Go through your credit reports and note all the fraudulent accounts you didn't open.

Report the identity theft

This may be the hardest step, but it's one you'll need to take. By law, you can get fraudulent accounts removed from your credit report. Most states also have laws that mean consumers aren't responsible for any debt incurred on fraudulent accounts.

However, creditors and the credit bureaus typically want proof that accounts are fraudulent. For that, you'll need to file an identity theft report and possibly a police report.

You can report identity theft online at IdentityTheft.gov. Click "Get Started," and the site will take you through the process.

The part that can be difficult is identifying your parents as the suspects. Creditors that were affected could go after your parents for debts. And criminal charges are a possibility depending on how much was stolen.

Even if this is hard to do, remember that the consequences aren't your fault. Your parents committed a crime that negatively affected you. You're simply doing what's necessary to fix your finances.

Notify credit bureaus and creditors

After you've reported the identity theft, contact the credit bureaus and creditors to let them know about fraudulent accounts.

All three credit bureaus allow consumers to file disputes online. You'll be able to upload your identity theft report as documentation during the process. Here are the respective dispute pages for each credit bureau:

• Equifax disputes
• Experian disputes
• TransUnion disputes (You'll need to register for an account with TransUnion to file a dispute.)

While the credit bureaus must let creditors know if an account is fraudulent, it's also a good idea to get in touch with each creditor yourself. That way, you can notify them of the fraud and get the account shut down as quickly as possible.

There may be phone numbers for creditors on your credit report. If not, you can search for a contact number online using each creditor's name.

Protect yourself from future fraud

The steps above will ensure that you're not liable for debt from current or past fraudulent accounts and that those fraudulent accounts won't affect your credit score. You still need to protect yourself from identity theft going forward, though.

One effective option is to freeze your credit, which blocks anyone from accessing your credit report. If your parents try to open a new account in your name, the creditor won't be able to pull your credit report, which means they likely won't approve the application.

Credit freezes are available online free of charge with each credit bureau. Keep in mind that you will need to remove the credit freeze, either temporarily or permanently, to open a credit card or any other new credit accounts yourself.

Another option is to set up a credit fraud alert with the credit bureaus. This type of alert means creditors have to take extra steps to verify your identity, such as calling you at a phone number you provide.

Recovering from identity theft by your parents

If you find out your parents stole your identity, the emotional and financial ramifications can be extremely challenging. But you can at least fix your credit and ensure that creditors don't hold you liable for debt that isn't yours.