How do lost or stolen credit cards impact my credit reports?

When you determine that your credit card has been lost or stolen, the first thing you need to do is contact your credit card issuer and each of  the three credit bureaus; Equifax, Experian and TransUnion.  If you think that you maybe a victim of fraud, you should also contact the police.

In addition, if it is confirmed as fraud, you can place a fraud alert on your credit report at all three bureaus for free.  They may require a police report to do so. And finally, you may be able to freeze your credit reports at no cost!

Thanks to the Fair Credit Billing Act (FCRA) you are responsible for a maximum of $50 of unauthorized charges prior to reporting the loss. Credit card issuers don’t usually require you to pay for the transactions on your account you did not authorize, which is called zero-liability.

The card is canceled by the card issuer and is reported as “lost or stolen” on your credit report.  It is treated the same as a closed account, and most importantly is NOT considered negative by credit scoring systems.  You are issued a new card with a new account number.  And, the closed account is still considered for the “length of time accounts have been open” and “payment history” measurements.

The key is how this information is reported to the credit bureaus by the credit card issuer, which can impact your credit.  There are two ways they can report it: 1) with the credit history of your former account or 2) as a new account with no prior history.

Reported with credit history

The new card is usually reported with the same information as the former account with payment history, date it was originally opened, credit limit and balance.  Since this information is the same, this should not impact you score, because the credit information has not changed.

Reported with no prior history

The least favorable alternative is that the credit card is reported as a newly opened account.  Remember that the “time” measurements count for 15 percent of the points in your credit score.

Credit Reporting Expert, 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.