According to mortgage-credit experts, recent massive data breaches at retailers could impact some real estate transactions over the coming months due to damaged credit files. The Target breach alone could affect as many as 70 million credit and debit card customers, and Neiman Marcus' data breach could leave 1.1 million customers vulnerable to fraud. At least six other merchants have experienced data breaches from point-of-sale malware.
Although Target and Neiman Marcus have offered free credit-monitoring services, experts say many people either have not taken advantage of these offers or may not be aware that their personal information is at risk. Identity theft, even if victims are not liable for the unauthorized debts, could impact their credit reports for weeks or months.
The sale and use of information stolen from retailers could derail home sales when sudden, new debts appear on buyers’ credit reports. Victims of identity theft could see their financing frozen until the credit report can be cleaned up, causing consumers to miss contractual deadlines with a home seller. Undetected run-ups of balances on credit cards also seriously affect “utilization ratios” and cause credit scores to drop. Lower credit score, in turn, could disqualify consumers for a home loan. Additionally, undetected use of personal information to create new credit cards could be time-consuming to fix. Merchants and credit bureaus will be on guard and will require proof and documentation before expunging bad information.
While independent credit reporting agencies may advise loan officers on how to improve applicants’ scores, identity theft repairs must be performed by the consumers themselves. Victims should contact the bureaus; place fraud alerts or freezes on their accounts; and then work to clean out the false information, line by line.