How does a lost or stolen credit card impact my credit score?

If your card has been lost or stolen you need to make sure that you report it immediately to the credit card issuer and also to the three consumer credit reporting agencies – Equifax, Experian and TransUnion.  If you suspect fraud may have occurred, you can place a fraud alert on your credit reports for free at the three credit reporting agencies.  You may also consider placing a credit freeze at the credit reporting agencies to prevent any access to your credit reports.

Because of a Federal law known as the Fair Credit Billing Act, you are only responsible for a maximum of $50 for unauthorized charges made on your credit card.  If there are charges after you report the theft, you have no liability at all.  And, most credit card issuers have a zero-liability policy and don’t make your liable for any fraudulent charges on the account.

As a result of your call to the card issuer they will cancel the card and report it as “lost or stolen” to the credit reporting agencies.  A new card with a new account number will be issued and sent to you.  How this new card will impact your credit score will depend on how it’s reported.

Reported with same information

If the newly issued card is reported with the same information as the preexisting account, such as payment history and the date it was originally opened, there won’t be an impact on your score.  Further, the credit limit and balances should be the same.  This is the most common way newly issued replacement cards are reported.

Reported as new account

If the new card is reported as a newly opened account with the date opened as a current date instead of the original date, this can negatively impact your score.  The scoring systems interpret this as you have recently opened a new account.  The score impact also depends on how long the original account had been opened.  If it was an older account and you don’t have any other older accounts this can also negatively impact your score because your length of credit history has been lowered.

Be sure to keep your cards secured so you don’t misplace or lose them.  In most cases the loss and replacement of a credit card won’t impact your score as long as the replacement mimics the original account re: credit reporting.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Credit Report, Credit Score, Identity Theft, Money & Identity

This post was written by John Ulzheimer