What is Identity Theft? How can I protect Myself from Identity Theft? What to do after your Identity has been Stolen

What is Identity Theft?

Identity theft occurs whenever someone obtains your personal and/or financial information and uses that information to commit fraud. Generally, victims of identity theft are not aware of their vulnerability until significant damage has been done to their credit report. While recovering from identity theft is possible, it is often a long and expensive process that may require the assistance of an attorney (see Hiring an Attorney to Help Repair Credit).

The most common type of identity theft takes place when a criminal uses your credit card to make fraudulent purchases or opens new credit card accounts in your name. Credit card information may be obtained a variety of ways (see How can I Protect Myself from Identity Theft?) and once that information is in the hands of an unscrupulous person, he or she may contact your credit card company to notify them of an address change. This would make it difficult for you to detect identity fraud right away as you will no longer receive monthly billing statements since they are being diverted to another address. Also, with just your name, birthday and social security number, a thief may open new credit accounts in your name. When these accounts become overdue and balances are maxed out, your credit is affected; this may hinder your ability to receive loans or other types of credit.

Thieves may also use your identification information to sign up for various services and utilities in your name. This may include things such as: cell phones, long-distance service and/or cable television. When these services are not paid for, it will affect information on your credit report. Such negative information may affect your ability to receive future credit.

In addition to the types of fraud already discussed, thieves may also use your personal information to open bank accounts. Often times, bad checks are written off the account that will show up on your credit report. Identity theft victims are usually unaware of any fraudulent activity until they start receiving bills in the mail or harassing phone calls from collection agencies (see How can I Protect Myself from Identity Theft?).

When thieves obtain any of your personal information, it is easy for them to use your good name to fund their lifestyle and ruin your credit. When your identity has been stolen, thieves may even file for bankruptcy in your name. Depending on the type of bankruptcy filed, this information may negatively impact your credit report for up to ten years.

Identity theft is a very serious issue that is illegal in all fifty states. One way that you can monitor your credit is to check your credit report annually for any suspicious accounts or activities. The federal government requires consumer reporting agencies to provide individuals with one free copy of their credit report a year. You may obtain your free credit report at www.annualcreditreport.com.