Identity Theft: The Crime That Turns Good Credit Bad

Touted loudly as a large and fastest growing crime in the United States, identity theft is, indeed, a serious problem that can devastate your credit and your ability to get loans, employment, insurance, and some security clearances and licenses without your ever having done anything to deserve it. An identity theft can also put you on the defensive, burdening you with the responsibility of proof — that you are not the person collectors are after.

Protecting your identity from theft

To avoid the havoc wreaked by identity theft, your best bet is to avoid being a victim ofidentity theft altogether. Consider these tips:

• Protect your financial information at home. Don't leave credit-card numbers and statements, Social Security information, bank account information, and other financial data unprotected. Most identity theft is low-tech (that is, paper-based). And most is carried out by people you know: friends, relatives, acquaintances, coworkers, and people you invite into your home for a variety of reasons.

Shred statements before putting them in the trash and lock your sensitive information away. Using your computer more (as long as you use it properly and password-protect information), is an even better way to avoid theft.

• Watch the mail. Sending and receiving financial statements and bills in your household mail can be risky. Most people think that no one is watching their unprotected mailboxes. And most are right, but that leaves the rest of you with sensitive account numbers and documents containing your Social Security number sitting all day in an unlocked mailbox outside your home or apartment. By comparison, e-mail is much safer.

Taking action if you're victimized

If you're a victim of identity theft, you may first discover that fact through a collection call on an account you never opened or unusual activity on a credit card or credit report. When you suspect your identity has been compromised, respond immediately. Here are some tips:

• Write down everything. This process may not be quick or simple, but it is critical.

• Call any creditors affected and close your accounts. Don't forget ATM and debit cards — you have higher limits of liability for these than you do credit cards, so they're particularly important.

• Call a credit bureau and place a fraud alert. The bureau you contact will inform the other two bureaus. A credit report will be sent to you after you make your call. Here are the big three in credit reporting:

• Equifax: 800-685-1111

• Experian: 888-397-3742

• TransUnion: 800-888-4213

• If you're in a state that allows you to freeze your credit report, do it. (You can unfreeze it later.) If you live in a no-freeze state, you can add a victim's statement to your credit report. This tells anyone getting your report that there is a problem with your file.

• Call the police and make out a report. Some creditors and collectors require this to take action. Be sure to get a copy of the report.