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4 Simple Steps to Protect Your Credit from Identity Theft

Identity theft is on the rise, according to the FTC, and it’s a crime that is getting more expensive than ever for American consumers. Last year it cost us $1.52 billion, up from $1.4 million in 2010. The median amount paid out per claim was $537. And that’s just the cost of reported crimes.

While identity theft can involve different types of fraud, one of the most common concerns information on your credit report. A thief who gets his hands on your social security number could apply for credit in your name and rack up hundreds or thousands of dollars in credit card debt before you can say, “I’ve been robbed.”

Fortunately, you can protect yourself. Follow these four steps to make sure you and your credit are protected from identity thieves.

Step #1: Make sure you haven’t been a victim in the past.

If you’ve never checked your credit report, now is the time to check for errors and signs of fraud. Get your credit report at AnnualCreditReport.com, where you can get a free copy once a year from each of the three credit bureaus. Your credit report is long and data-rich, so take the time to review it carefully. Keep an eye out for:

  • Credit inquiries (also known as hard inquiries) that you didn’t initiate
  • Loans or accounts that you don’t recall opening
  • Incorrect personal information, such as an address that is not your own
  • Current activity on accounts you have not recently used

If you find incorrect information that could be a sign of identity theft, file a police report and dispute the errors. The FTC has a great guide on what to do if you suspect that your identity has been stolen.

Step #2: Get credit monitoring.

Once you’ve made sure your identity hasn’t been stolen and cleaned up fraudulent accounts if it has, it’s time to start protecting yourself. Sign up for free credit monitoring at CreditKarma.com. This service will monitor your credit report on a daily basis for any significant changes and alert you via email if a change has occurred. You’ll be able to act quickly if you suspect fraud. If you’re already a member of CreditKarma.com, simply adjust your communication preferences in your profile.

Step #3: Set up preventative measures.

Most credit card issuers will allow you to set up alerts on your accounts. For instance, you can request to receive an email or text if your credit balance approaches a pre-determined limit or if your card is charged with a large or over-the-limit purchase. Additionally, if you frequently shop online, make sure you haven’t saved your credit card information on the retailers’ websites. Although most reputable retailers will have high-level security, data breaches aren’t uncommon, so it’s a good idea to keep your information as safe as possible.

Step #4: Make your online accounts impenetrable.

Lastly, remember that protecting yourself and your credit should be an on-going process. If you bank or access any credit accounts online or on your phone, make sure you take the proper precautions and update them frequently. Use these steps to create a perfect password. Make your passwords difficult to remember and near-impossible to crack, and update them every six months. Don’t want to remember a long list of passwords? Use a service like LastPass. It saves all of your passwords for you, but is also password-protected, leaving you with just one password to remember.

Bottom Line: If you follow these steps to protect your credit from identity theft, you, your identity and your financial accounts will be better secured against thieves. However, no system is perfect. Check your free credit report on a regular basis and monitor changes to your credit score daily, for free, on CreditKarma.com.

Bethy Hardeman is the social media maven at CreditKarma.com, a completely free credit management service that provides free credit scores, financial education and personalized savings recommendations. Credit Karma helps more than 4.5 million consumers realize the everyday cost savings of having a good credit score.

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