Identity theft is a multi-billion dollar problem. With a seemingly endless number of ways for identity thieves to get at your personal information, practically every move you make in our modern-day digital world is putting you at risk for identity theft and subsequent financial loss.
That’s no reason to live your life in fear, though. There are precautions you can take to protect yourself. Here’s how you can help prevent identity theft—to keep yourself safe and to help make sure your identity and your money are secure.
Identity Theft Defined
The National Crime Victimization Survey (NCVS) defines identity theft with three general types of incidents:
- Unauthorized use or attempted use of an existing account, such as a debit or credit card account.
- Unauthorized use or attempted use of personal information to open a new account.
- Misuse of personal information for a fraudulent purpose, such as obtaining government benefits or providing false information to police during a crime or traffic stop.
Online shopping, email and social media, utility services, bank accounts, mortgages, auto loans, and smartphones are just some of the ways identity thieves have access to your private information.
The Justice Department’s Bureau of Justice Statistics reports that 16.6 million people experienced identity theft in 2012, with financial losses totaling $24.7 billion. That means seven percent of all persons age 16 or older in the United States experienced at least one incident of identity theft in 2012.
The 2015 Identity Fraud Study revealed that 2014 was a mixed year in the fight against identity theft, with some advances and some setbacks. The study found that fraudsters stole $16 billion from 12.7 million consumers in the U.S. last year. With a new identity fraud victim every two seconds, there is still significant risk to consumers, especially students.
With all these potential pitfalls lurking around every corner in your digital life, it’s no wonder we have become paranoid with fear. It’s no longer as easy to say: “It probably won’t happen to me.” Rather, you want to know how to prevent identity theft.
How can you protect yourself from becoming a victim? After all, monitoring the use of your personal information and credit can be quite time consuming. If you add the additional time and money you will spend if you become a victim, it can become a nightmarish scene.
Using an identity theft protection service is the best way to protect your personal information from being misused, but there are many industry best practices you can put in place on your own for free—if you’re willing to put in the time and effort.
1. Monitor Your Credit
Keeping track of your credit on a regular basis is one of the most important elements of identity theft protection. There are three reporting credit bureaus:
Individually, they provide you with information about your credit history along with a credit score and a variety of credit-monitoring options, both paid and unpaid, to keep tabs your credit. Combined, they create what is known as your FICO score, a number that is used by the vast majority of banks and credit grantors to establish your creditworthiness.
Mechel Glass, VP of Community Outreach for CredAbility, recommends:
“When you check your credit, make sure you check it on a regular basis. You can get one free copy of your credit report from each of the three credit bureaus each year. So if you want to check that systematically, you can pull your first one from Equifax, then three or four months later, pull the next one from Experian, and three or four months later, pull the next one from Trans Union. Keeping up to date with what’s going on (with your credit) is key to avoiding identity theft.”
2. Password Protection
Let’s talk about the passwords you create online. It seems that practically every online business requires you have a username and password to access certain information on their website and/or your specific account details. Any or all of these accounts could have sensitive personal information that could be used by thieves to steal your identity.
Make sure the password you use for each account is unique and strong—and consider changing your passwords frequently. And avoid using any information you may share over social media—like the names of your children or pets, or your birthdate—to prevent identity thieves from easily guessing your password.
Also, don’t share your passwords with anyone, not even with your friends or family. Keep a record of your passwords in a safe location, like in an encrypted file on your computer. If you have an Apple product—like a MacBook, iPad, or iPhone—you can use iCloud Keychain, Apple’s password manager which stores complex, unique passwords in the user’s iCloud storage so you don’t have to remember what your passwords are.
Of course, if you prefer to keep a hard copy of your passwords, be sure to store the information in a safe place.
3. Don’t Carry All Your Credit Cards With You
Do you carry all of your credit cards in your wallet or purse? If so, ask yourself how many times you use more than one card on any given day. There may be some cards you rarely use.
Instead of carrying all your credit cards with you, reduce your risk for identity theft by only carrying the card or cards you will need for that particular day. That way, if your wallet is lost or stolen, a potential identity thief will not have access to all of your credit accounts.
Additionally, you should keep track of what’s in your wallet. Start an inventory that includes:
- names and personal information on each account,
- account numbers for each card,
- authorized users on each account,
- name of each issuing company or bank,
- phone numbers of each issuing company or bank so you can report your lost or stolen cards.
Keep your wallet inventory information in a safe place and refer to it if your wallet is lost or stolen.
4. Keep Your Personal Information Safe
In addition to only carrying those credit cards you will need on any given day, there are a few other items that have no place in your wallet, namely your social security card and your birth certificate. Leave these items at home, in a safe and secure location, where they belong.
If you are only carrying your driver’s license, one credit card, and a small amount of cash, you will be at much less risk of identity theft if your wallet is lost or stolen.
5. Don’t Carry a Checkbook if You’re Not Writing Checks
If you are not going to be writing any checks, there is no reason for you to be carrying your checkbook around with you, either. Leave it at home. An identity thief could potentially take your checks—which include your bank’s routing number and your account number—and start writing checks on your account.
6. Match Your Credit Card and Bank Statements to Spending
It’s easy to get so busy with your life that you put off or completely disregard certain financial tasks that deserve a few moments of your time each month.
Be sure to match your credit card statements with your actual spending. Pay particular attention to any small withdrawals that you might not have otherwise noticed if you weren’t diligently checking your account. It’s a lot easier for an identity thief to take money from you slowly, hoping you won’t notice. And be sure to do the same with your bank statements.
7. Shred Your Discarded Account Statements
If you are going to throw away any mail or account statements that contain personal information—like your social security number or date of birth—or account details, don’t simply tear or crumple the paperwork before placing it in the garbage. Be sure to shred them first. In fact, you may want to purchase a cross-cut shredder that tears apart documents both vertically and horizontally, to ensure that nobody can read anything that was written on those papers.
8. Put a Freeze on Your Credit if You Don’t Use it
Let’s say you’re not using your credit. You already own your house. You already own your car. You’re not in the market to buy anything that warrants a credit check. Consider putting a freeze on your credit.
A credit freeze will typically stop all access to your credit report. It may not stop the misuse of your existing accounts or other types of identity theft against you, but if someone tries to get credit in your name, they will be out of luck.
A credit freeze should not be confused with a fraud alert, which is a federal right intended for people who believe they are, or who actually have been, victims of identity theft.
The cost to place and lift a freeze depends on your state’s law. In most states, victims of identity theft can place a credit freeze for free, but in others, victims have to pay a fee, usually around $10. Contact your state Attorney General’s office for more information.
How to Prevent Identity Theft
If you pay attention to all eight of the points of protection mentioned above, you will reduce your chances of having your identity compromised. Still, it is not a comprehensive list. Identity theft protection is a complicated subject and there are a seemingly endless number of ways someone can gain access to your personal information if they want to badly enough.
If you want to be in charge of your own identity theft protection, you should understand just how complicated it is. First of all, you need the knowledge to do it correctly and secondly, you need ample time to devote to it.
Most people don’t have the knowledge or time.
Credit monitoring services are a good start, but they can’t come close to tracking all of the information that exists about you—like any activity that involves your personal information beyond a credit card.
For added convenience and peace of mind, you can choose a proactive third-party service to do the work for you. In most cases, this type of service provides far more advanced identity theft protection than you can achieve on your own. With a little help, you will be able to identify potential threats before any damage can be done.
By taking a proactive approach to ensure your safety and protection—along with some professional help from industry-leading experts—you can enjoy a sense of confidence to live freely in our always-connected digital world.