What is Identity Theft?
According to the Federal Trade Commission, approximately 9 million cases of identity theft occur each year. Identity theft is a type of fraud where one person assumes the identity another person. It is a crime punishable by law. Typically, identity theft is perpetrated for monetary gain. This can include draining existing accounts, opening new accounts, applying for loans, or making purchases. A person’s identity is their financial reputation. If tarnished, it may never be completely restored and can effect a person for the remainder of his or her life. Every time credit is applied for, the issue is likely to resurface. The frightening aspect of identity theft is how easily it is accomplished. There are, however, things a person can do to safeguard their identity against potential thieves.
Identity theft has repercussions that can extend into the remaining years of the victim’s life. A person is issued only one social security number, once this number is exposed, it may be forever tied to the perpetrators actions. This is why it is so important to prevent identity theft from occurring initially or take prompt action in detection, reporting, and restoration. In the short term, a stolen identity means that a thief has access to all of your accounts and information. They can, on paper, become you, regardless of their own credit reputation. They do not, however, have the same responsible concerns about preserving their new reputation. The thief’s plan is most likely to drain all of the monetary value out of your credit reputation and then move on to their next victim. In the long term, a stolen identity can effect your ability to sign for loans for a home, a car, an education, for yourself or your children, and can even effect your ability to get a job.
The severity and duration of identity theft should be motivation enough to convince an person to protect their identity. This article will discuss how to prevent identity theft from happening. Or if you are one of the 9 million Americans that has had their identity stolen this year, how to detect it, report it, and restore your reputation.
How to Prevent it?
Identity theft can be prevented. Your goal should be to make your identity extremely difficult to obtain. The way to do this is to be informed. Know the most likely places that identities are obtained. Stay current. Identity thieves are extremely resourceful and are continually coming up with new innovative ways to obtain your information. Keep an eye on your accounts and credit score. Be careful, checking on your credit score too frequently can actually effect it. Don’t give your personal and financial information to just anyone. Make sure that the company has a strong reputation and resources in place to help you restore your credit if they are at fault. Remember, a company will never call or email you and ask for your information. Do not carry your social security card or financial information in your purse or wallet. Keep this information in a secure, preferably locked, location. Safeguard your trash and your mail. Cut up financial and personal information and dispose of it in different bags.
Besides behavior modification, there are other ways to prevent identity theft to consider. There is the option of placing a freeze on your credit file. This will not effect your score but before your credit information can be obtained for credit extensions, this freeze will have to be lifted. Credit freezes are not available in all states, however. Another option to consider is identity theft insurance. Although this will not deter thieves, it will provide adequate compensation if it occurs.
How to Detect it?
One of the best ways to detect identity theft is to closely monitor bank statements and accounts, as well as check credit reports. Because of the modern-day convenience of online banking, monitoring accounts has become quicker and easier and credit reports can be accessed for free or for a fee. There are signs that you should look for. Some common signs are debts to your accounts that you did not make, receiving mail for new accounts that you did not set up or loans that you did not apply for. Another sign of identity theft is receiving calls from debt collectors for balances that you did not make. Many victims only discover that their identity has been stolen after extensive damage has already been incurred to their credit when months or years later when they are unable to get approved for loans, credit, or a mortgage. The sooner identity theft is detected, the sooner it can be reported and restored.
How to Report and Restore it?
Once you become aware that you are a victim of identity theft, time is of the essence. A few days or weeks could irrevocably alter your credit score and save you countless hours of fighting for your reputation. Make sure to keep a detailed record log of all conversations and save all correspondence. You should first place a fraud alert on your credit report, so that the thief is not able to open any additional account in your name, by contacting only one of the following:
- Equifax Consumer Credit Reporting Agency
- TransUnion Credit Score Report Company
- Experian Global Credit Information Group
Restoring your credit after identity theft is a daunting task. There are many steps to take and things to consider. You should request a credit report and highlight all of the credit inquiries from companies that you are not affiliated with, unexplained changes to your current accounts, and new accounts that you did not open. You must file an identity theft report and continually check the accuracy of your information in the future. Contact all financial institutions involved and close all accounts that have been opened by the thief or your current accounts that have been tampered with. File a complaint with the Federal Trade Commission, as well as, the local police in your area and in the thief’s community.
It often takes victims between 175 to 600 hours to restore identity and credit after a theft. Up to a 25% of people who have been victimized by identity theft never fully restore their identity, and have to deal with the occurrence for the remainder of their lives.
Many people believe a new social security number will cure their identity theft issues. You should carefully consider doing this. It is unlikely that a new number will completely solve your credit issues. The Credit Bureaus sometimes combine both social security numbers into one report. And even if this does not happen, the lack of a credit history may cause new credit issues. No credit is often interpreted as bad credit.
Continue Reading – Protect Your Credit Score, Part 2