Identity Theft

What’s the Big Deal?

Identity theft is usually more than someone making a purchase on your credit card; it can lead to serious financial problems and lower your credit score. Although credit cards are often a main target, if a scam artist gets his hands on your Social Security number, he can open bank accounts and apply for loans in your name. Since we can assume that this scammer doesn’t have good credit history himself (after all why would he need yours if his was good?), he will probably default on the loan or run up high credit card debt then disappear.

When the creditors come looking for their money, they will come to you. It can take years to completely clear your name. This can be especially harmful when you apply for a loan or mortgage, since the lending organization may base a decision on the errors on your credit report, leading you to be turned down or charged a higher interest rate.

Identity theft crooks can get your information several ways, most commonly by going through garbage, scamming the numbers out of you by pretending to be a salesperson, or by stealing your credit cards or information from wallets or personal records.

Safety Precautions

Fortunately, there are several steps you can take to avoid falling victim to an identity predator.

• Use a shredder. Never throw away your credit card bills, bank statements, or even health records that have identifying information on them. Keep them in a safe place in your house or shred them before putting them in the garbage. A basic shredder only costs about $20 so it’s money well-spent if it keeps you safe.
• Watch your mail. Sending personal information through the postal service can open you up to mail thieves. These scammers take your mail right out of the box. If your delivered mail tends to sit for several hours before you can get it, think about changing some of your accounts to automatic payment plans you can manage online. When you mail out bills that have account numbers on them, you may be better off dropping it off at the post office or putting it in a postal drop box rather than letting it sit outside your home unattended.
• Don’t share your information. Anyone with a telephone can call you and offer you an unbelievable deal on steak knives or magazines, or claim to be associated with the local sheriff’s organization. But you have no way of knowing if it’s a legitimate deal or just the kid down the street. If you are offered a deal that interests you, ask them to mail you more information. If they try to pressure you into giving them your credit card numbers, get off the line.
• Watch out for online scams. Just like with telephone solicitors, you need to be careful where you use your credit card online. Only use reputable sites, and don’t click on links sent to you via e-mail. Although it may look like a real site, it could be a copycat.

What to Do

Reviewing your free annual credit report regularly can alert you to unknown accounts or irregularities that may indicate someone is using your identity. Also keep a close eye on your bank statements and credit card bills since the first sign of trouble will often show up there.

If you do find yourself in trouble, contact your credit card companies, your local police, and file a report with the Federal Trade Commission. You should also close any accounts that have been compromised and get in touch with the three credit reporting companies to try to repair your credit report right away.

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