Protect Your Credit Score: Tips for Avoiding Identity Theft (PART ONE)

The best way to survive identity theft's impact on your credit score is to prevent it from happening in the first place.   It's surprisingly easy for a thief to use personal information, such as your credit card numbers, bank account data or social security number to pose as you and spend your money.  The damages however, go well beyond the loss of money.  Your credit score can be completely damaged by identity theft, and it typically takes years to recover from the crime.  Preventing identity theft is your best protection.

Take a Proactive Stance

The most frequent cause of identity theft is lost or careless handling of wallets, checkbooks, credit cards and other personal information.  In fact, about 30 percent of identity theft is a result of thieves finding lost personal information, or taking it from someone who has thrown out credit card statements and other sensitive information without shredding it first.  The percentage of identity theft that occurs from lost or stolen data is higher than online transactions and computer hackings.

Unfortunately, most consumers believe they are helpless against identity theft.  While many occurrences of identity theft are in fact beyond our individual control, there are ways to become proactive against fraud, and help you detect fraud early enough to avoid becoming a complete victim.

Fighting Identity Theft

Personal Information Must Be Kept Private

At least half of identity theft cases are committed by someone the victim knows: a coworker, neighbor, friend, relative or an employee that works within the home.  Before you throw items into your trash, shred it!  This is old news, but can really go a long way in protecting your valuable information.  Don't leave your mail and other personal belongings lying around your home where someone could have access to it.

Obtain Your Credit Reports

The law entitles every consumer a free credit report annually from each of the three primary credit reporting agencies, including Equifax, TransUnion and Experian.  You can get your free reports from www.annualcreditreport.com.  Take advantage of the free report to check for unauthorized transactions.  Additionally, consider signing up for one of the credit monitoring services that sends alerts whenever changes are made to your credit report so you get the earliest possible detection opportunities that helps you stop fraud before it takes over your life.

Freeze Your Assets

In some states, you can freeze access to your credit report.  This is probably the easiest way to prevent fraud since no one else would be able to use your personal information to get approved for new credit.  It's not highly convenient however, since whenever you want to do anything that involves your credit (buy a car, get a cell phone, get a store credit card, interview for a new job, change insurance companies, etc), you'll have to first lift the block on your credit report ("thaw") which will take about three days.  If you are already a victim of identity theft, these inconveniences are minor.  Additionally- the inconvenience might be seen as minor if it means preventing the nightmare that results from identity fraud.  To find out if your state has the freeze option, check www.financialprivacynow.org.