Financial Consequences of Identity Theft
Abstract: We examine how a negative shock from identity theft affects consumer credit market behavior. We show that the immediate effects of fraud 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 prior to identity theft.
File(s): File format is text/html https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2020/wp20-33.pdf
Provider: Federal Reserve Bank of Philadelphia
Part of Series: Working Papers
Publication Date: 2020-08-13
Note: Supersedes Working Paper 19-02