Identity theft is one of the most common, and damaging, issues which American consumers face today. In 2017, at least 16.7 million American consumers were victims of identity theft, costing American consumers over $17 billion. 

In the face of such a widespread problem, it is easy to lose hope, and worry that there is no way to avoid the damaging impact of having your good name stolen. Yet, there are a number of steps you can take, to reduce the chances of becoming a victim of identity theft, and limit the damage, if for some reason identity theft does end up happening to you. 

1. Monitor Your Credit

If you are a victim of identity theft, your credit report is perhaps the first place where this will become obvious. Therefore, monitoring your credit regularly is very important.   

If an identity thief opens an unauthorized account in your name, it will appear in the section of your credit reports where open accounts are listed. If you’re keeping an eye on that information every month, it will quickly become obvious that something is not right. 

Second, to open an unauthorized credit account, a credit application will usually have to be submitted in your name. Such a credit application, also known as a hard credit inquiry, will appear on your credit reports, and alert you that your identity has somehow been compromised.

We suggest signing up for Credit Karma. Here, you’ll recieve regularly updated, free copies of your Equifax and TransUnion credit reports. You’ll want to check the sections labeled “Accounts” and “Inquiries.” 

If an account was opened, or credit applied for, without your permission, you’ll see it in these respective sections. Credit Karma also sends you regular alerts, if they have reason to believe you’ve been a victim of identity theft. 

Note that Credit Karma will show you offers for credit cards, personal loans, mortgages and more. While these offers are sometimes competitive and useful, we always suggest doing outside research before signing up for anything, and asking yourself whether you really need the card. 

How often should you check Credit Karma? We suggest once per month. Pick a day each month, and put it on your calendar, that you must login that day, to check your credit reports.

Credit Karma does not provide you with your Experian credit reports. You can get those from freecreditscore.com. Don’t opt in to any of the paid offerings, which require your credit card information. 

Freecreditscore.com offers an easy format to monitor your open accounts and inquiries.  Freecreditscore.com will also provide you with your FICO score, which is useful.

Lastly, we suggest obtaining your official credit reports, from Annual Credit Report, at least once per year. This is the most complete source of information regarding your credit. Check your entire report for any accounts or inquiries you don’t recognize.

2. Keep An Eye On Bank, Credit & Investment Accounts Centrally Through Mint 

Besides monitoring your credit reports, it is also important that you closely monitor your individual financial accounts. In some cases, rather than opening new credit accounts, identity thieves might hijack existing accounts. This means that unexpected spending or withdrawals might appear on your bank, credit card or investment accounts. 

You need to keep a regular eye on each account, so that if it were compromised, you can take action quickly. This helps reduce the damage caused by the unauthorized takeover of an account.  

It also helps prevent banks, credit card issuers and other lenders from passing the large long-term costs of identity theft on to consumers. The more people who fall victim to identity theft, and the more money which is stolen, the more it costs each of us. This will ultimately save you (and many other Americans) quite a bit of money, over the long run. 

We suggest monitoring all of your accounts online. This way, you can login regularly, and see what is going on. Of course, it’s inconvenient to login to each account separately, even once or twice per month. 

For this reason, you should sign up with Mint. Mint is a free desktop and mobile app, which allows you to centrally view and monitor each of your accounts, including bank, spending, investments and much more. You can easily keep an eye on any unusual activity this way. 

3. Opt Out of Prescreened Offers

You’ve probably recieved offers in the mail, inviting you to apply for a credit card, mortgage, or other financial product. How did these companies obtain your information? 

Basically, they requested your credit information, from a credit bureau, so that they could decide whether to offer you some sort of credit. Usually, lenders will ask credit bureaus to let them contact everyone whose credit falls within a certain score range, to offer a product which they believe might be a fit for these consumers. 

This is known as a “soft pull”, or “promotional inquiry”, and it will not impact your credit score. 

These offers are typically not the most competitive you’ll recieve, although they can sometimes be useful, particularly if you are looking to build or improve credit. 

The bigger issue is, receiving such offers means that your credit report is being accessed regularly. While there is no direct proof that this increases the odds of identity theft, we believe that limiting access to your credit reports, reduces the risk. After all, the more that your credit report is “floating around”, the greater the chances that someone with bad intentions might access it.

To opt out of receiving these sorts of prescreened offers, you’ll want to visit www.optoutprescreen.com, and choose not to recieve offers. You can either permanently opt out of receiving such offers, or you can choose not to recieve them, for a period of five years. We suggest permanently opting out.

Of course, in the future, you might want to shop for credit. However, you don’t need preapproved offers to do so. You can visit websites like Nerdwallet, Bankrate, Credit Karma or Lending Tree, to find the best offers for mortgages, auto loans, credit cards and more.

4. Protect Your Internet Passwords By Changing Them Regularly

One very common (and damaging) means by which identity theft occurs, is through identity thieves gaining access to your online accounts. Often, they do this through the use of sophisticated computer programs, which figure out your password. 

We suggest changing your passwords, every six months or so. This reduces the chances that hackers will succesfully gain access to your accounts, by not making it too easy to gain access.

5. Collect Your Mail Promptly (And Arrange For Mail Forwarding)

A larger and larger portion of identity theft schemes these days make use of the Internet. However, identity theft through the use of mail is still an issue, and it is important to take steps to prevent this from happening. 

One thing you can do, is make sure to pick up your mail promptly, so that no one can tamper with your mailbox. Also, if you move to another state, you’ll want to make sure to arrange for mail forwarding, so that only you gain access to your mail. 

6. Be Careful of Responding To Emails Or Clicking Links From People You Don’t Know

“Phishing” is a common tactic of identity thieves. Basically, you’ll recieve an email, often one which contains a link, and asks you to open it. This link will be used to gain access to your computer, and hack into your accounts.

In order to prevent this, you’ll want to only open emails from people (or organizations) whom you know. Even with them, if you have any doubt that a link is authentic, email or call the sender, and find out what is going on. 

7. Avoid Sharing Personal Information Over The Phone Or By Email

This might sound like an obvious tip, but you’d be surprised how common this sort of identity theft can be. Basically, an identity thief will call you, pretending that you owe money on your taxes, or are enrolling in health insurance. To engage in these sorts of transactions, you usually need to provide personal information, such as your Social Security Number, or date of birth. This can then be used to steal your identity, resulting in a lot of damage. 

The same is true of email. Just as with phishing, you might recieve an email from what seems to be a legitimate source, asking you for information, but which is an attempt to actually steal your personal information. Obviously, be very careful in what sort of information you provide by email.

8. Shred Sensitive Documents Before Throwing Them In The Trash

While most identity theft these days occurs by stealing information online, some low-tech methods are still used, and can have severe consequences for you. One of these is stealing receipts, bank statements, and other personal documents from the trash, often near apartment buildings or offices. 

To prevent this, you’ll want to shred any receipts, statements, or other documents. Opting into paperless, and no longer receiving documents in the mail, is a good way to avoid these sorts of issues. 

The Final Word

Identity theft is a scary issue to think about, let alone personally deal with. Fortunately, you don’t have to worry. If you keep a regular eye on your credit reports and financial accounts, and take smart steps to prevent your information from being compromised, you have a good chance to avoid identity theft. 

If for some reason you do fall victim to identity theft, don’t worry – there are important steps you can take, to limit the damage, and protect your good name. Review the Federal Trade Commission’s identity theft guide, and follow the steps detailed there. It will ultimately pay off.