Identity Theft Can Put Your Finances At Risk: Here's How To Prevent It

• Author: Mary Singleton
• Posted: 2024-08-29

Identity theft is an incredibly common problem that has affected millions of people over the years. In fact, due to how digitized the world has become, it's more of an issue now than it ever was before.

Identity theft can jeopardize your financial health and wreak havoc on your life, which is why you should take whatever steps are necessary to prevent it from happening.

What Is Identity Theft?

Identity theft is when someone uses someone else's personal information, such as a birthdate or social security number, to impersonate them and open lines of credit or receive services in their name.

Identity theft can often go undetected for long periods of time which is one of the reasons it's such an issue. Someone can rack up thousands of dollars worth of debt that you end up being liable for and you might not notice it for months or even years down the line.

How Does Identity Theft Work?

Identity theft can take many different forms, but they all involve an identity thief pretending they're someone else. Some common types of identity theft include:

• Using someone's identity to receive medical services in their name


• Opening lines of credit in someone else's name


• Taking over someone's financial accounts


• Using a person's identity to misdirect criminal investigations


• Using someone's social security number to steal their tax return

As you can see, identity theft involves a wide variety of activities and often covers things you might not think about such as leading the police to suspect you are a criminal.

How Can You Prevent Identity Theft?

Although identity theft has the potential to turn your life completely upside down, there are many steps you can take to prevent it from happening.

Use Lots Of Different Complex Passwords

Passwords are a big deal. Once a thief has access to your financial accounts or emails, they can easily steal large amounts of your money.

A good way to prevent this is to not use the same password for multiple accounts and to make sure the passwords you use are long and complex. Passwords should be at least 10 characters long and have random assortments of numbers and letters. Easily recognizable words and simple number patterns like '123' should be avoided.

Keep Your Social Security Number Safe

Don't hand out your social security number!

Your social security number is one of the most important things you need in your day-to-day life. Give it out as infrequently as possible and always make sure that when you do it's to highly reliable individuals or institutions.

Always think about why someone is requesting your social security number and don't be afraid to ask questions or outright refuse to give it out if you feel like something is off.

Look At Your Credit Frequently

It's a good idea to look at your credit report often, at least every couple of months, to see if your credit score has suddenly dropped or to see if credit cards have been opened in your name that you never went through the process of applying for.

Watch Your Mail Closely

Identity theft through mailed items is incredibly common. Thieves can use your name and attached address to gather all sorts of information about you.

Retrieve your mail frequently, watch your mailbox like a hawk, and get a secure mailbox from the post office if you deem it necessary.

Look For Malicious Emails

Since the advent of the internet, identity thieves have used malware sent through email attachments to steal people's personal information.

If you receive random, suspicious, and spammy emails from random email accounts that are super insistent you click on something, put them in your spam folder, delete them, and report them if at all possible.

Freezing Your Credit

As a last ditch effort, you can freeze your credit. This means that credit reporting agencies cannot release your personal information to credit card agencies or other institutions.

This makes it virtually impossible for someone (including you) to open a line of credit in your name. These freezes have to be done individually with each credit reporting agency (TransUnion, Experian, Equifax).

Under federal law, these agencies are required to freeze your credit for free at your convenience and a credit freeze can be lifted whenever you want.

Keeping Your Finances Secure

Doing what you can to prevent identity theft is one of the most important things you can do for your financial security.

Years worth of work can be obliterated in a relatively short period of time and you might have to spend a long time rebuilding your credit or constantly appearing in court.

Keep your financial information secure and only give it out to trusted sources.