Financial Consequences of Severe Identity Theft in the U.S.

Supersedes Working Paper 19-02 – Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records and Working Paper 20-33 – Financial Consequences of Identity Theft

We show that the immediate effects of severe identity theft on credit files are typically negative, small, and transitory. After those immediate effects fade, identity theft victims experience persistent increases in credit scores and declines in reported delinquencies, with a significant proportion of affected consumers transitioning from subprime-to-prime credit scores. Those consumers take advantage of their improved creditworthiness to obtain additional credit, including auto loans and mortgages. Despite having larger balances, these individuals default on their loans less than they did prior to the identity theft incident.