Identity Theft Basics

When you hear the term identity theft, you may wonder what it means. It can be hard to picture since it is somewhat of an abstract concept. It gets its name from the fact that an individual takes your personal information and pretends to be you, thus, in effect, stealing your identity. You are still as much you as you always were, but there is another “you” running around spending your money or running up credit charges –without your knowledge. Well, until you get the bills and collection notices or your credit rating gets dumped in the gutter.

So how can an identity thief access your account or open new accounts in your name? All he or she needs is a couple pieces of personal information: an account number, an address, a password, etc. The big one is your Social Security number since it can unlock the most doors for the thief. With this information at hand, the crook can impersonate you perfectly on the Internet, over the phone or through the mail. He or she can also sell or trade your information to other identity thieves, creating a domino effect.

It’s pretty scary if you think about it. This happens to millions of Americans every year, and identity theft is not going anywhere anytime soon. But there is no reason to start panicking. You just have to beat the thieves by protecting yourself.

The first thing you should do to catch identity thieves or prevent them from striking is order a copy of your credit report from each of the three major credit bureaus. If you go to annualcreditreport.com you can order a copy of each one for free. Check your reports for inaccuracies and let the credit bureaus know of any corrections immediately by following the instructions included in your report.
Once that’s done, and was hopefully quick and painless, you need to change some habits you might have that could make you a prime target for identity thieves. For example, do you dump your old bank statements in the garbage can intact? Thieves have no qualms about picking through your trash. Always, always shred them first.

Second, how safe is your Internet surfing? Do you have the same password for every account? Is it the last four digits of your Social Security number or something else people can easily guess? Change it now and change it often. Once a month is a good plan. And while you’re on the Web, delete any emails you get asking for personal information without responding to them in any manner whatsoever. In the overwhelming majority of cases, these are from identity thieves looking to “phish” your information by convincing you to log on to legitimate looking websites that are actually fakes they have created.

Now, think about identity theft insurance plans. Even as you begin to take more precautions, your identity could be compromised through a situation that’s beyond your control, such as a data breach at your local bank. Identity theft protection can help to mitigate the risk and keep your money where it belongs – in your own pocket.