4 Myths About Identity Theft and How to Prevent It

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Identity Theft

David Bakke is a financial writer for Money Crashers Personal Finance, a resource website that covers important topics like credit and debt, money management, real estate, and frugal living.

It’s a fact: Identity theft is a serious issue. In severe cases, it can cost you as much as 130 hours of your time and $1,500 to reestablish your identity. However, despite this threat, spending a ton of money on identity theft protection and credit report monitoring usually isn’t necessary.

There are plenty of misconceptions regarding identity theft. However, being aware of them can help you fully protect yourself without spending a fortune.

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Common Identity Fraud Myths

  • It Only Happens to the Other Guy. In 2011, 11.6 million Americans fell prey to at least some sort of identity fraud. Therefore, it can happen to you. Just because you’ve never had a problem doesn’t mean that you never will.
  • Criminals Don’t Know Their Victims. In most cases, the criminal has some sort of relationship with the identity theft victim, whether it’s a friend, family member, or business associate. Therefore, be very careful when revealing usernames, passwords, or any personal financial information to anyone you know.
  • Most Identity Theft Cases Occur Online. Most cases of identity theft actually take place offline – common methods include stealing mail or looking through someone’s garbage. Keep this in mind when you go on vacation or dispose of your sensitive documents. Also, don’t be afraid to shop online. The security software used by most websites protects you against identity theft. Look for the letters “https” at the beginning of the URL, and check for some sort of SSL certificate, such as VeriSign.
  • Protecting Your Social Security Number Is Enough. While protecting your Social Security number certainly is important, you need to do much more. A criminal who gains access to your financial information has full ability to run up charges. Never divulge your Social Security number to anyone unless you’re absolutely sure it’s safe, but be sure to protect other sensitive information as well, such as account numbers, usernames, and passwords.

How to Prevent Identity Theft

  • Never Carry Your Checkbook. This may seem like a no-brainer, but many people still have this bad habit. If you must pay for something with a check, write the name of the payee on the check beforehand and don’t sign it until you’re ready to purchase. Keep your checkbook at home in a secure location.
  • Monitor Your Credit. You can check your credit score three times per year without spending a dime. Check out the website Annualcreditreport.com for details. Review your credit report for any debts that don’t belong to you, and if you see an issue, file a dispute with the credit reporting agency.
  • Change Your Passwords on a Timely Basis. Did you know that the most common password is “123456″? First of all, never use something so simple. A secure password should have at least seven characters and contain upper- and lowercase letters, along with numbers or punctuation marks. Even if your passwords are strong, change them on a regular basis. This is inconvenient, but when compared to the mess of fixing an identity theft, it is much simpler to manage.
  • Shred Documents. A basic document shredder costs less than $20. Shred any document you plan to discard that contains an account number, signature, or Social Security number. Shred all credit card offers, as well as anything with medical or legal information on it.
  • Install Antivirus Software. Consider free antivirus options such as AVG or Avast, which provide you with all the protection you need. Securing your personal information is important; spending a ton of money to do so is not.
  • Use Common Sense. If you’re applying for a new credit card, divulging your Social Security number is a necessity. If you need your roof fixed, there’s no need for that. Far too many instances of identity theft occur only because people simply failed to use their common sense strategies.

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Final Thoughts

Be aware of the importance of maintaining your personal security at every turn, as the effects of identity theft on your life can be devastating. If you still want an identity protection service, just be sure to investigate whether the service works to prevent identity theft, or merely helps you in case it occurs. This is a huge distinction.

What else do you do to protect your personal information?