Every year, millions of people fall victim to identity theft -- and those are just the numbers of people who know they have become victims. There are many more people who are completely unaware!
Identity theft can happen to anyone and it could be relatively contained, like if someone gets one of your credit card numbers, or it could be much broader with longer-term consequences, like if someone is able to take most of your personal information, banking information, and access to credit. According to one study done in 2003, it took victims an average of 600 hours to fix problems created by identity theft.
Identity theft is costly, time-consuming, and can dramatically lower your credit score, making life extremely difficult for many years while you work to correct the problem.
So stopping identity theft as quickly as possible the best course of action.
Reviewing creditor statements every month is a good way to keep regular tabs on your existing accounts but that won't alert you to new accounts opened in your name. A way to find those is to pull your credit reports regularly (at least twice a year, or perhaps even more frequently than that) and review them for information that does not belong to you. One of the resources you can use to get your free report is AnnualCreditReport.com.
But what happens if you are the victim of identity theft? I recently spoke to Maxine Sweet, vice president of public education for Experian. She gave me some excellent advice, which I'm summarizing below.
The best course of action is to get in touch with each of the three credit reporting agencies directly -- Experian, Equifax, and TransUnion -- and let them know that you have been a victim of fraud.
Ask for a fraud alert to be placed on your credit report. A fraud alert is a 90-day alert placed on your report that warns lenders to verify your ID, giving you time to determine if you really are a victim, and automatically opts you out of pre-approved offers (such as those credit card offers you get in the mail). If you find that you are a victim, you need to file a police report and may choose to request an extended fraud victim statement that will remain on your credit report for seven years. (Don't worry, you will still be able to apply for loans and other forms of credit but you might be required to provide additional identification, so that lenders can make sure that you are you and not someone posing as you!)
And, because you are a victim of fraud, you will also receive your credit report for free from each of the credit reporting agencies. (Don't use AnnualCreditReport.com -- save it for when you want to regularly check your credit throughout the year.)
Once you get your credit reports, go over them carefully. Identify any issues that are incorrect. Some of these might be innocent errors because credit reporting companies update billions of accounts each month reported from many different lenders, but some of the errors might be indicators of identity theft. As well, watch for credit accounts that you do not recognize and, on credit accounts that you do recognize, watch for activity that wasn't from you.
Identity theft is a costly, growing problem and it's not going away any time soon. The best defense is a good offense (by checking your credit regularly) but if you do become a victim of identity theft, get in touch with the credit reporting agencies and put a stop to it immediately!