Q. I have been notified that one of my credit cards was used fraudulently and is now under investigation. The card was canceled. How does this hurt my credit report?
— Credit worried
A. Usually, if your credit card has been compromised, there shouldn’t be any adverse impact on your credit report.
To make sure you’re covered, a few things need to happen.
Typically, if you have fraudulent activity on your card, the credit card issuer will reissue a new card with a different account number, said Nick Clements of MagnifyMoney.com.
Importantly, he said, the new account number should be tied to your previous account for credit bureau reporting purposes.
“As a result, you should only have one tradeline on your credit report even though you have a new account number,” Clements said. “It should be treated no differently than receiving a new credit card after your old plastic expires.”
If there are disputed balances on the account, you should not be responsible for paying that balance while the fraud is being investigated, he said.
Still, there are a few things that could go wrong.
Your credit card issuer might decide not to reissue a card and close the account, Clements said. For example, if you have a store card that has not been used for years and it was compromised as a result of a fraud, the issuer might decide that it is not worth the price of reissuing the card.
That could negatively impact your credit score. If it’s an older card, the cancellation could shorten your length of credit history. And by removing available credit, you could see a ding to your credit utilization ratio. You can learn more about that here.
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