Advertiser Disclosure

How to Prevent Identity Theft

Follow these tips to safeguard your personal information, freeze your credit and monitor your accounts.
March 5, 2020
Credit Score, Personal Finance
How to Prevent Identify Theft
At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

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. There are a few different kinds of identity theft, including synthetic identity theft and child identity theft.

If you have a credit card, your information is likely out in the world thanks to frequent data breaches. 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.

1. Freeze or lock your credit

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, and it provides the best protection.

Locking your credit is an easier alternative, but you may have less legal protection than with a freeze. All three credit bureaus offer an app that allows you to lock or unlock your credit on your smartphone.

If you don’t want to freeze your credit, look into identity theft protection services. While these companies cannot prevent identity theft, they can alert you to uses of your personal information and help you recover from fraud. Credit monitoring services offered by the three main credit bureaus are similar, but they often fall short on protections — especially if the credit bureau itself suffers a data breach.

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. Securely store or shred paperwork containing your Social Security number.

Protect your credit

Checking your credit regularly helps you spot activity that could suggest identity theft.

3. Strengthen passwords

Random combinations of letters, numbers and special characters, different for each account, work best. Don’t rely on “security questions” to secure your accounts; 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. If you do recognize the sender, consider navigating to the website directly rather than using an email link.

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.

Don’t assume past-due or collections notices are in error; they may be the first sign of identity theft.

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 advises knowing 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.

8. Protect your data on mobile devices

Mobile devices can be a real risk. Keep these tips in mind:

  • Use a password on your phone and set up a personal identification number on your cell phone account.
  • Keep software updated and use hard-to-guess passwords and two-factor identification when available. Consider using an authenticator app rather than texts to your phone to handle two-factor authentication for financial, social media and other sensitive accounts.
  • Turn off Bluetooth unless you are using it.
  • Be aware that when you use public Wi-Fi, others may be able to see your data.
  • Be cautious about 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 and medical 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.

Review “explanation of benefits” statements to make sure you recognize the services provided, to guard against health care fraud. Store health care records securely and shred paperwork that’s no longer needed. Go directly to your insurance website rather than clicking on links in emails, and be suspicious of calls asking for personal information on the pretext of completing billing or filling a prescription.

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 check your credit and accounts for signs of unauthorized use and know how to report identity theft.


About the author