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Adam Schuda was doing his taxes earlier this year, using software that directed him to his credit report. That's when the 36-year-old surgical tech got an unwelcome surprise: There were three accounts that were not his.

Schuda, who lives in Minneapolis, suspected he was a victim of identity theft. “My credit score dropped about 60 points or more, taking me from good to poor credit in a day,” he says.

His suspicion proved correct, and he is now working through the time-consuming but necessary ID theft recovery process, which includes filing a report with the Federal Trade Commission and alerting the three retailers—Fingerhut, Old Navy, and Ulta—where someone went on a spending spree using credit cards applied for in his name.

Schuda joins the ranks of millions of consumers who have had their identities stolen by fraudsters seeking financial gain, experts say. Fraud involving credit cards is the most common kind.

ID fraud victims numbered a record 16.7 million in 2017, up 8 percent from the prior year, according to research firm Javelin’s most recent Identity Fraud Report, issued last February.

According to Justice Department statistics, 88 percent of ID theft victims suffered no out-of-pocket loss in 2016, the most recent year for which data is available. That's because credit card companies and banks already cover most or all losses due to fraud.

But it's still up to you to straighten out the situation so that your credit score doesn't take a hit and you can open new credit accounts in the future.

More on Identity Theft

Some people find out they've been the victim of ID theft when they are denied credit or start getting calls from debt collectors for bills they had no idea they owed, says Kimi Nolte, lead victim services coordinator for Victim Support Services, a regional nonprofit in Everett, Wash.

Others, like Schuda, find out when they check their credit reports, which underscores the importance of reviewing those documents regularly.

To get your credit report, go to the website of each of the three main credit bureaus—EquifaxExperian, and TransUnion—or go to annualcreditreport.com for all three. Make sure to check all three reports, because some things can show up earlier or later on one vs. another.

In addition to reviewing all the listed credit accounts and confirming that they're yours, pay attention to any hard inquiries—also called hard pulls—on your credit. These are basically credit checks done just before a new credit card account or line of credit is opened or loan made. You also want to report any fraudulent inquiries because they can negatively affect your credit score. 

If you suspect that you are the victim of identify theft, follow this step-by-step recovery process. 

File a Report

If you find fraudulent accounts or hard inquires on your credit report, file a report with the FTC at identitytheft.gov, or with your local police. This report is a legally binding affidavit that states you have been a victim of identity theft. Note that in the case of a federal government shutdown, the FTC could be impacted—and in fact it was closed during the 35-day shutdown that began at the end of 2018, Nolte warns. 

Call the Companies Where the Fraud Occurred

Ask to speak to someone in the fraud department. Let them know you have an ID theft report filed with the FTC or police that you want to provide them. Then ask that they place a hold on any accounts in your name so that there’s no other activity while you go through the recovery process.

Ask that they remove bogus charges and close accounts you never created to begin with. Check your credit report later to make sure these corrections were made. 

Communicate With Each Credit Bureau

Tell them of the fraud by sending a copy of your identity theft affidavit to each credit bureau and requesting that the fraudulent activity be removed from your credit report. Again, check your report later to verify your report has been corrected.

Safeguard Against Future Problems

To do this, consider putting an alert on your credit file or freezing your credit. Both actions will help prevent future attempts by fraudsters to open credit accounts in your name. 

Alerts and freezes work differently and offer different levels of protection. Alerts have long been free. Though consumers in some states had to pay fees to freeze their credit in the past, freezes became free nationwide in September.

To put an alert on your credit report, contact one of the three credit bureaus. The bureau you contact must inform the other two. The alert will let creditors know that they must take extra steps to verify your identity, making it harder for an identity thief to open more accounts in your name.

Normally, a fraud alert lasts one year and entitles you to one additional free credit report from each bureau. But if you have an FTC affidavit or police report that you were the victim of ID theft, the alert lasts for seven years. You can still obtain credit while the alert is in effect.

A freeze means no new credit will be given to you—or to someone posing as you. To completely freeze your credit, you must contact each credit bureau individually.

What if you happen to need credit during this time? Say you are buying a car and need an auto loan. You can thaw the freeze on your credit. You will get a personal identification number (PIN) from each bureau. Use the PIN to thaw and refreeze your credit.

Let the auto dealership know your situation and ask which credit bureau it will use to run your credit. Then contact that credit bureau to thaw your credit for 24 hours. After the car dealer makes its check, simply refreeze your credit.

A freeze is a good idea for consumers who don’t regularly need to open new credit accounts. For example, freezes would work well for older consumers who have cars and homes that are already financed or paid off and don’t intend to take on new car loans, mortgages, or credit cards.

But for college students who are regularly applying for student loans or might need a new credit card, alerts may pose fewer headaches.