The Identity Theft Thwarting Guide

There is no surefire way to stop identity theft because so much of our information is already out there.  According to a recent survey, more than 93 million personal data records have been lost or stolen since February 2005.  In many ways, we are powerless by the inept and downright irresponsible actions of financial institution who lose or misplace confidential information.  But there are some steps you can take to be diligent about your records.

First lets talk about what a thief would need in order to steal your identity.  It is surprisingly little.  A credit card number and a Social Security Number goes a long way.  With these two pieces of information, thieves can open accounts and borrow money in your name or establish a new life as you, complete with job, home and claims on your Social Security benefits.

The most important form of identity theft, charging purchases on your credit card, costs you nothing and is relatively easy to fix, although it will take some time.  A new type of service gaining popularity is identity theft protection services and they are a waste of money.  Even the best are very limited in what they can do.  Credit monitoring services can neither tell you if someone is using your social security number to get a driver license nor prevent identity theft.  They just alert you after the fact of the crime.  Here are some tips to thwart identity theft:

1. Get three free credit reports a year - You are entitled to a free credit report once a year from each of the major credit bureaus.  Order one every four months by calling 877-322-8228.  You can get another set of free reports if you call any one of the major bureaus and request that it place a fraud alert on your file.  The alert tells lenders that are checking your report that they must call you before they extend credit in your name.

2. Monitor your financial accounts frequently - Most banking and credit card accounts can be monitored online.  If you see a charge for even $1 that you are not familiar with, immediately contact the financial institution.  The more frequent you check your accounts, the less likely damage can be done.

3. Use Cash or a credit card, not a debit card - I've been saying this forever for many different reasons, but in this case, cash and credit cards do not leave any trace of your bank account information.  And making more charges on your credit card isn't likely to increase your risk of identity theft.  On another more practical note, credit cards provide a much better safety net than debit cards since they fall under federal laws, which are more comprehensive in protecting you than  state laws, which debit cards transactions fall under.

4. Opt Out - Tell banks, insurance companies and brokerages that you do not want your financial information and credit status shared with anyone.  Companies must send you opt-out privacy notices, which offer a toll-free number to call or an address where you can send a written address (which I don't think anyone uses).  Alternatively, call the three major credit bureaus at 888-567-8688 to opt out of prescreened offers of credit and insurance.

5. Don't fall for phisers - Ignore all phone or email solicitations or security checks from institutions that do business with unless you initiated the exchange.  Your bank isn't sending you an email asking for your account number.  That's a crook hoping to rip you off.

6. Don't share your personal data with anyone - Leave your social security card at home, and don't offer your number to anyone unless it's for tax, unemployment or credit purposes.  And finally, shred all your financial documents you no longer need.

Being diligent is truly the only way to thwart any kind of identity theft.  The average time a person spends to fix identity theft is now 60-100 hours and it usually takes 6-12 months to repair.  So before you even ask this to yourself, it is time well spent.