Identity Theft and Your Credit Score in Canada

Identity theft is one of the most damaging events that can happen to your Canadian credit file. Unlike a missed payment or high utilization — which you can address directly — identity theft involves fraudulent accounts and inquiries you didn't authorize. Here's how to detect it, stop it, and recover your credit score.

Signs of Identity Theft on Your Canadian Credit File

• Accounts you don't recognize appearing on your Equifax or TransUnion report
• Hard inquiries from lenders you never applied to
• Bills or collection notices for debts you don't owe
• Unexplained drops in your credit score
• Calls from creditors or collection agencies for accounts you didn't open
• Being denied credit for reasons that don't match your known credit history
• Tax returns being rejected (identity theft also affects CRA)

Immediate Steps if You Suspect Identity Theft

1. Pull both credit reports immediately: Borrowell (Equifax) and Credit Karma (TransUnion). Identify every account and inquiry you don't recognize.
2. Place a fraud alert: Contact Equifax at 1-800-465-7166 and TransUnion at 1-800-663-9980 to place a fraud alert. This requires lenders to take extra verification steps before extending credit in your name.
3. File a police report: Essential for documenting the crime and necessary for many dispute processes.
4. Report to the Canadian Anti-Fraud Centre: 1-888-495-8501 or antifraudcentre.ca
5. Contact affected lenders: For every account you didn't open, contact the lender directly with your police report and request the fraudulent account be removed.
6. Dispute fraudulent items: File disputes with both Equifax and TransUnion for every fraudulent account and inquiry, providing your police report as documentation.

Credit Freeze vs. Fraud Alert

How Identity Theft Affects Your Credit Score

Identity theft causes score damage through: new hard inquiries from unauthorized applications, new accounts with balances (fraudulent debt), potentially missed payments on fraudulent accounts as the thief doesn't pay them. In severe cases, a victim's score can drop 100-200 points from identity theft alone.

The good news: once fraudulent accounts are documented and disputed, they are typically removed within 30-90 days, and your score can recover quickly since the damage was not caused by your own behaviour.