Identity theft happens when someone steals your personal information so they can access your financial accounts, open new accounts or commit other crimes. Many identity thefts occur via a data breach when a fraudster uses someone’s personal information to apply for a line of credit, get medical services or file a tax return to score a big refund.

Identity theft can play out in several ways, but it boils down to one thing in the end — fraud. And if you’re on the raw end of identity fraud, you might spend months or years and thousands of dollars restoring your identity.

The Problem With Identity Theft

If you’ve never been an identity theft victim, you might be wondering what the big deal is. The unfortunate reality is that identity theft can affect your life in more ways than one. 

Not only can identity theft result in financial losses if the thief is able to access your bank accounts, account numbers, credit card numbers and other assets, but having to spend your time and effort chasing a thief’s paper trail takes an emotional and mental toll. If an identity thief charges purchases in your name and it takes time to fix the situation, you also could see your credit score drop.

Finally, identity thieves don’t just go after our money and credit — they also go after our personal information. If a fraudster hacks your social media accounts and posts something negative or strange, your professional and personal relationships could be damaged.

While it might take time to figure out that you’ve been targeted for identity theft, there are a few signs to watch out for, such as:

  • Charges for purchases that you didn’t make.
  • Withdrawals from your bank account that you don’t recognize.
  • Notifications that someone — not you — applied for a change of address.

If you notice anything out of place with your accounts, your best bet is to address  it the right away. First thing: Pour over your financial statements to determine whether fraud occurred. If you find you are a victim of identity theft, report it to the Federal Trade Commission (FTC) online at or by phone at 1-877-438-4338.

5 Ways To Stop Identity Theft in Its Tracks

When it comes to identity theft, an ounce of prevention is worth a pound of cure. You can find plenty of ways to decrease the likelihood of becoming a victim, and most are free. Here are five easy steps you can take now.

  1. Monitor your credit reports

Credit expert John Ulzheimer says one of the most straightforward steps you can take to protect yourself is to pull your credit reports a few times a year to check for errors and inaccuracies. Fortunately, you can get your free credit reporting from the three major credit bureaus — Experian, Equifax, and TransUnion — once a year for free at  

  1. Pay for credit monitoring

Ulzheimer says another step you can take is to enroll in a credit-monitoring service run by one of the credit bureaus. Experian, for example, offers credit-monitoring and identity theft prevention services starting at $9.99 per month. 

While some programs let you monitor your credit through one credit bureau for free, paying for a service that allows you to monitor all three of your credit reports offers more protection.

  1. Freeze your credit reports

You might catch fraudulent activity after the fact if you monitor your credit reports or pay a service to do it, but you won’t prevent ID theft from taking place. To really prevent it, Ulzheimer says, you should do what’s called a credit freeze which means freezing your credit reports with all three credit bureaus, restricting access to your credit file. 

“You’re not waiting to see if something bad happens — you’re preventing it,” Ulzheimer says.

“If someone can’t open an account in your name, then you’re absolutely stopping identity theft before it starts.”

Freezing your credit reports is free. Keep in mind that if you want to apply for a new line of credit when your reports are frozen, you’ll need to “unfreeze” your credit reports temporarily before submitting applications.

If you’re eager to give this a try, the FTC provides easy-to-follow instructions.

  1. Keep personal and financial records in a safe place

The FTC supplies some basic advice on how to protect your identity at home. For example, stash financial records, including Social Security information and Medicare cards, in a safe place. Also, use a high-quality shredder to destroy mail that includes any of your personal information. Furthermore, be careful with giving out important details like your Social Security  — and never disclose it to someone who calls or emails you seeking that number.

Finally, keep close tabs on your mail and review your banking and credit card statements regularly.

  1. Protect yourself online

If you turn to the internet for shopping, banking and other day-to-day activities, it’s crucial to protect your online identity. This starts with using passwords that aren’t easy to guess or using a password safety service like LastPass or Dashlane. Also, never respond to emails that seek your personal information, and never send sensitive information via a public computer.

If an online service you’re using offers safety features like multi-factor identification, use them. The last critical step: Install antivirus software on your computer to add a layer of protection.