Credit Score Basics > How identity fraud can affect your mortgage

How identity fraud can affect your mortgage

Wollit Team2 minute read · Updated 1st July 2024

Identity fraud is a serious problem in the UK that can affect many parts of your financial life, including your ability to get a mortgage or remortgage.

How can identity fraud affect my credit score or mortgage eligibility?

Identity fraud happens when someone steals your personal information and uses it to get credit in your name.

This can lead to a poor credit score because you might not be able to repay this credit, which means defaults or missed payments. Even if the fraudster's credit applications are rejected, the multiple hard credit checks can still hurt your credit score.

A poor credit score, in turn, makes it harder to get a mortgage or other types of credit. This is because lenders rely heavily on credit reports to assess mortgage and remortgage applications, so any signs of poor creditworthiness can lead to rejections or higher interest rates.

Could someone take a mortgage in my name?

Yes, it is possible for someone to take out a mortgage in your name, especially if you have a buy-to-let property. This type of fraud is known as property hijacking, and it’s become more prevalent since the coronavirus pandemic.

Here’s how property hijacking works:

A criminal poses as a tenant and rents your property using fake documents.
They legally change their name to match your name (found on the tenancy agreement) through a Deed Poll.
Using the new name and fake documents, the criminal then either lists the property for sale or takes a secured loan on the property.
If the property is sold, a solicitor begins the conveyancing process. During this time, it's hard to detect any discrepancies, and the sales transaction may actually go forward if no one notices anything suspicious.
Once the criminal receives the proceeds, they quickly transfer the money to an overseas bank account. If this happened through a secured loan, this can leave you with the debt and legal consequences.

What should I do if I suspect identity fraud?

If you suspect that you are a victim of identity fraud, act quickly:

Report the fraud to Action Fraud Police, the UK's national fraud and cybercrime reporting agency.
Contact your bank.
Contact the credit reference agencies (Experian, Equifax, and TransUnion) to report any suspicious activity and to help them investigate and correct any fraudulent entries on your credit report.
Check your credit reports and dispute anything suspicious.
Set up fraud alerts on your credit report to notify lenders that you are a victim of identity fraud and that they should verify your identity before extending credit.
Take protective registration with CIFAS. This stops fraudsters from taking further credit in your name.
Add a Notice of Correction to your credit file to explain to lenders that you’re disputing the fraudulent mortgage. This will help them understand your real financial situation.

In short, identity fraud can have serious consequences. It can hurt your credit score and it can even leave you on the hook for debt that you’re not responsible for. Act quickly to reduce its impact on your credit history and credit score.