If identity theft happens to you, rectifying the damage can be like untangling a wet knot. You can do it — but it will require patience and perseverance.

In 2022, the Federal Trade Commission received more than 1.1 million reports of identity theft. If you notice unusual activity on any of your accounts, moving quickly can help stop the fraud in its tracks and get your finances back to normal.

Assess the situation

The first step in addressing identity theft is to remain calm. It’s important to take a methodical approach to handle the situation. Start by identifying how your identity was compromised. Did you receive a bill for an account you didn’t open? Notice unauthorized transactions on your bank or credit card statements? Receive a call from a debt collector about debts you don’t owe? Document everything you notice that doesn’t appear right.

Place a fraud alert or freeze your credit: which should you choose?

Two key tools at your disposal when you suspect identity theft: placing a fraud alert on your credit report and freezing your credit.

When to place a fraud alert on your credit report

A fraud alert is a good first step if you suspect your identity has been compromised but aren’t certain if your personal information has been misused. Placing a fraud alert on your credit report notifies creditors to take extra precautions when verifying your identity before issuing credit in your name. This alert lasts for one year and is free to place. It’s particularly useful if you’re concerned about potential identity theft but still need to maintain access to your credit for activities like applying for loans or opening new accounts.

A fraud alert also makes sense if you’ve lost your wallet or personal information but haven’t yet seen any fraudulent activity. It’s a proactive measure that adds a layer of protection without fully locking down your credit.

When to freeze your credit

A credit freeze offers a stronger level of protection by completely restricting access to your credit report. When your credit is frozen, no one — including you — can open new credit accounts until you lift the freeze. This makes it much more difficult for identity thieves to do any further damage. Freezing your credit is ideal if you’ve confirmed that your identity has been stolen or if you’re dealing with ongoing identity theft issues.

A credit freeze is also advisable if you don’t anticipate needing access to new credit in the near future and want to take a more secure approach. While the freeze is in place, you’ll need to temporarily lift it if you have to apply for credit, which can be done quickly and at no cost.

Review your credit reports

After placing a fraud alert or credit freeze, you’re entitled to a free copy of your credit report from each of the three credit bureaus. Carefully review these reports for any unfamiliar accounts or activity. If you find any fraudulent accounts, make note of them, as you will need to dispute these charges and provide documentation to the companies involved.

Report the identity theft to the Federal Trade Commission

File a report with the Federal Trade Commission (FTC) at IdentityTheft.gov. The FTC will generate an identity theft report and a recovery plan tailored to your situation. This report is critical, as it provides proof that you have been a victim of identity theft and can be used to dispute fraudulent accounts and charges.

Contact companies where fraud occurred

Get in touch with the companies where the fraudulent activity took place, whether it’s a bank, credit card company, or other institution. Inform them that your identity was stolen, and ask them to close or freeze any accounts that were fraudulently opened or accessed. Follow up with a written dispute and include your FTC identity theft report and any other documentation they require.

Dispute fraudulent accounts and charges

Using your FTC identity theft report, dispute fraudulent accounts and charges with the credit bureaus. They are required to block this information from appearing on your credit report once they receive your dispute and supporting documentation. Most bureaus offer multiple ways to file a dispute — online, by mail, or by phone. Filing online is often the quickest method, but sending a dispute by mail can provide a paper trail and proof of your efforts. Be persistent and keep records of all correspondence and follow-ups.

Inform the IRS and Social Security Administration

If your Social Security number was compromised, inform the IRS and the Social Security Administration. This can help prevent tax-related identity theft, where thieves file false tax returns in your name to claim refunds. The IRS can issue an identity protection PIN (IP PIN) to add an extra layer of security to your tax filings.

Recovering from identity theft can feel overwhelming, but taking the right steps can help you regain control and protect your financial future. Disputing fraudulent accounts and charges with the credit bureaus is a crucial part of this process, and being proactive about monitoring your credit is essential.