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How to Prevent Identity Theft

Safeguard your personal information, secure your credit through a freeze or lock and monitor your accounts.
Aug. 5, 2019
Credit Score, Personal Finance
How to Prevent Identify Theft
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Identity theft is using someone else’s personal information without their consent, usually for financial gain.

Among U.S. residents 16 or older, about 1 in 10 was a victim of identity theft in 2016, the latest year for which statistics are available, according to the U.S. Department of Justice. That’s about 26 million people.

If you have a credit card, your information is likely out in the post-data-breach world. In this new reality, it’s smart to take steps to prevent malicious actors from using your personal information and ruining your financial life.

Here are 10 ways to protect yourself from identity theft.

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1. Freeze or lock your credit

Freezing or locking your credit are two easy ways to limit the use of your credit information.

Freezing your credit with all three major reporting bureaus — Equifax, Experian and TransUnion — restricts access to your records so new credit files cannot be opened unless you unfreeze your account. It’s free to freeze and unfreeze your credit at each bureau.

Locking your credit is an easier alternative to freezing, which is the strongest protection to prevent identity theft. All three credit bureaus offer an app that allows you to lock or unlock your credit via on your smartphone. It’s free, though you may have less legal protection with a lock than a freeze.

» MORE: How credit lock apps from Equifax, Experian and TransUnion compare

2. Safeguard your Social Security number

Your Social Security number is a master key to your personal data.  Guard it as best you can. When you are asked for your number, ask why it is needed and how it will be protected. Don’t carry your card with you.

3. Strengthen passwords

Random combinations of letters, numbers and special characters, different for each account, work best. Your mother’s maiden name and your pet’s name aren’t hard to find.

4. Limit how much information you share

Can strangers see your full name, birthdate and family members’ names on Facebook? Would you give any of that information to a caller asking the right questions? (ProPublica found many people are willing to trade that kind of information for a free cookie.) Don’t click on email links if you don’t recognize the sender.

5. Watch the mail

Stolen mail is one of the easiest paths to a stolen identity. Have your mail held if you’re out of town. Consider a U.S. Postal Service-approved lockable mailbox. You can also sign up for Informed Delivery through the USPS, which gives you a preview of your mail so you can tell if anything is missing.

6. Make liberal use of a shredder

Any credit card or bank statements that someone could fish out of your garbage shouldn’t be there in the first place. Shred junk mail, too, especially preapproved offers of credit.

7. Use caution when shopping in stores

The Federal Trade Commission suggests:

  • Know where your wallet is at all times.
  • Be careful with your debit or credit card (no putting it in a coat pocket “just for a second.”).
  • Don’t tell anyone your PIN and don’t keep it with your card in case you forget.

8. Protect your mobile devices with passwords

Mobile devices can be a real risk, particularly if you don’t password-protect them. Keep software updated and use hard-to-guess passwords and two-factor identification when available. Turn off Bluetooth unless you are using it. When you use public Wi-Fi, others may be able to see your data. Lastly, be cautious in downloading free apps, which can contain malware.

9. Check your credit reports frequently

You’re entitled to an annual credit report every year from each of the three major credit reporting bureaus. Consider requesting one report every four months, so you can check for suspicious or incorrect information throughout the year. In between those requests, you can monitor your free credit report from NerdWallet to monitor your credit and also watch your score for changes.

10. Monitor your financial statements

Read credit card and bank statements. Make sure you recognize every charge, no matter how small. Know due dates and call to investigate if you do not receive an expected bill. Read health insurance claims and make sure you actually received the care your insurance paid for. (If someone else’s health records are mixed in with yours, the results could be life-threatening.)

Stay alert

No matter how careful you are, you could become a victim. A restaurant employee could snap a photo of your card with a smartphone. You could hear on the news about a data breach that involves a credit card you have used or a store that you frequent. Having your data compromised does not mean that your identity will be stolen, but it is a reason to be extra vigilant.

The sooner you detect a problem, the sooner you can fix it. Regularly checking your credit also avoids the possibility of discovering you have a problem at exactly the moment you had planned to use it.