Identity Theft Protection Guide: Prevent, Detect, and Recover

Understanding Identity Theft

Identity theft occurs when someone uses your personal information without your permission to commit fraud or other crimes. The most common form involves opening credit accounts, making purchases, or obtaining loans using your name and Social Security number.

Identity theft can happen in many ways: through data breaches at companies where your information is stored, through phishing emails and scam phone calls, through stolen mail, through skimming devices at ATMs, and through social engineering on social media.

The financial impact of identity theft can be devastating. Victims spend an average of 200 hours and $1,400 out of pocket resolving identity theft issues. The damage to your credit score can take months or years to fully repair.

Preventing Identity Theft

Use strong, unique passwords for all your online accounts. A password manager can help you generate and store complex passwords for each account. Enable two-factor authentication wherever possible to add an extra layer of security.

Monitor your financial accounts and credit reports regularly. Set up alerts for unusual activity on your bank and credit card accounts. Check your credit reports at least once per year from all three bureaus for accounts or inquiries you do not recognize.

Shred documents containing personal information before disposing of them. This includes bank statements, credit card offers, medical bills, and tax documents. Do not carry your Social Security card in your wallet.

What to Do If You Are a Victim

Contact the fraud departments of the three major credit bureaus and request a fraud alert on your credit reports. This alert requires creditors to verify your identity before opening new accounts and lasts for one year.

File a report with the FTC at IdentityTheft.gov. The FTC provides a personalized recovery plan and pre-filled letters that you can use to dispute fraudulent accounts with credit bureaus and creditors.

Close fraudulent accounts and dispute them with the credit bureaus. Contact each company where a fraudulent account was opened, explain that you are a victim of identity theft, and request that the account be closed and marked as fraudulent.

Credit Monitoring and Protection Services

Credit monitoring services alert you to changes on your credit report, including new accounts, hard inquiries, and changes in balances. Many free and paid services are available, including those offered by credit card issuers, banks, and dedicated monitoring companies.

Identity theft insurance is available through some homeowners and renters insurance policies, as well as through standalone policies. This insurance can help cover out-of-pocket expenses related to identity theft recovery.

Consider a credit freeze for maximum protection. A credit freeze blocks access to your credit report entirely, making it virtually impossible for identity thieves to open new accounts in your name. Credit freezes are free and can be temporarily lifted when you need to apply for credit.