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Editor: and
Updated by: and
Published: Oct 16, 2023 18 min read

Identity theft has become increasingly common as people spend more of their lives online. Unfortunately, simple day-to-day things like checking your credit card balance or logging into your favorite coffee shop's Wi-Fi can make you vulnerable.

Identity theft, also known as identity fraud, is a crime where someone uses your personal data — such as your address, birthdate or credit card number — and in doing so causes you personal or financial harm. While one of the best identity theft protection services can monitor your accounts to help you detect fraud quickly, you can also take certain steps on your own to limit your risk of identity theft.

Read on to learn the different types of identity theft, how to protect yourself and what to do if your identity is stolen.

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What happens if your identity is stolen?

A stolen identity can significantly impact your life in many ways. Identity thieves can steal and use your personal information for fraudulent activities, like applying for credit cards and loans in your name. They could also carry out other serious offenses — like tax fraud by filing for a tax return in your name, or criminal identity theft by using your name when arrested.

The consequences can vary based on how the scammers use your information. For example, you could end up with bills for things you never purchased or face trouble with authorities or the IRS. If you're a victim of medical identity theft and a scammer files an insurance claim in your name, your medical record may contain incorrect health information.

The fraudulent financial activity will be reflected in your credit score, likely causing it to drop. Some of the repercussions of a lower credit score include the following:

  • Trouble getting approved for loans
  • Higher interest rates on loans
  • Difficulty getting a new job
  • Increased insurance premiums
  • Denials for new credit cards
  • Difficulty getting approved for rental applications

If you discover your identity has been stolen, you must act quickly. It’s possible to recover from the financial damage, but the process requires a lot of time and effort. Keep reading to learn about best practices that can help safeguard your information and protect yourself from identity theft.

How to prevent identity theft

Preventing identity theft may not be entirely possible since most people's private and financial information is stored and shared digitally. Once you share your information with a company or government entity, it's their responsibility to keep it safe from cybercriminals.

Although there aren’t any guaranteed ways to prevent identity theft, there are some steps you can take to minimize your risk or catch it early on:

1. Know the warning signs of identity theft

Catching identity theft early reduces the damage to your finances and credit. Some signs of a stolen identity include the following:

  • Accounts on your credit report that you didn't open
  • Bills for items you didn't purchase
  • Loan denials
  • Calls from debt collectors for accounts you didn't open
  • Medical bills that aren’t yours
  • Suspicious activity on your bank statements

2. Secure your Social Security card and other sensitive documents

Your personal documents are targets for thieves. Don't carry your Social Security card, birth certificate or passport in your purse, wallet or car unless necessary. Whenever you do, don't leave the documents unattended. At home, consider keeping the documents in a safe in case there’s a burglary.

3. Don’t share sensitive information (unless necessary)

One of the most important identity theft prevention tips is to keep your personal and financial information private. Don’t share your Social Security number, debit card PIN, driver's license number, birthdate and other sensitive information through phone calls, text messages, email or social media. If you receive a phone call or email from a bank or other financial institution, make sure their contact information is valid before sharing any details.

For example, check the sender's full address if you receive an email from your bank requesting information under the pretext of updating your account. A scammer's email will usually include an extra letter, number or word when compared to the email of the legitimate company. The body of the email might have typos and other grammatical errors as well.

If you receive this type of email, even if it seems legitimate, it's best to go directly to your account's website yourself instead of clicking on any links provided in the message.

Also, keep in mind that government agencies like the IRS, for example, will never contact you by calling or texting to request personal information or threaten legal action against you.

4. Review your credit report regularly

Reviewing your credit report can help you spot inaccurate information like new accounts you didn't open or any hard inquiries — credit checks associated with loan or credit card applications.

Previously, consumers had the right to an annual credit report from each of the major credit bureaus — Equifax, Experian and TransUnion. However, due to the financial hardships the COVID-19 pandemic brought many people, the credit reporting agencies began offering free weekly credit reports. As of September 2023, the credit bureaus have permanently extended this free service. You can request your free weekly copy through AnnualCreditReport.com.

5. Consider freezing your credit and setting up fraud alerts

A credit freeze prevents new accounts from being opened in your name until you lift the freeze. Credit bureaus will provide you with a unique PIN or password you can use to unfreeze your report as needed. If you’re interested in this option, make sure to read our step-by-step guide on how to freeze credit.

You should also consider setting up a fraud alert with each credit reporting agency. These alerts require creditors to contact you (usually by phone) and verify your identity before opening new credit lines or accounts in your name.

Both credit freeze and fraud alerts are free, and can be set up simultaneously.

6. Monitor monthly bills

Check your credit card and bank statements for unauthorized charges. If you do spot any suspicious activity, contact your bank or credit card company immediately. They may stop the fraudulent transaction, cancel the compromised account and prevent damage to your credit.

7. Use strong passwords and a password manager

Avoid using sequential letters and numbers ("1234" or "abcd") and personal information in your passwords. Instead, use a strong password that includes 12 characters or more and combines random numbers, symbols and letters (uppercase and lowercase).

Also, it's crucial never to reuse passwords across your accounts. If hackers acquire a reused password in a data breach, it could give them access to all accounts sharing the same login credentials.

Most people find that coming up with dozens of unique passwords and remembering them can be a hassle. If that’s the case, a password manager software could help — these programs generate passwords for you and store them in encrypted formats that are almost impossible to decipher.

8. Set up an IRS PIN

An IRS PIN (also known as an Identity Protection PIN) is a six-digit number assigned to taxpayers that helps prevent someone from using your information to file a fraudulent tax return. The IRS won't accept tax forms in your name unless the code is provided as well. You can request your PIN from the IRS website.

9. Enable two-step authentication

Two-step authentication (also called two-factor authentication or 2FA) provides an extra security safeguard to your usual password. When enabled, it requires you to enter a code after you input your password. The code changes each time and you’ll receive it either through an email, call or text message. If someone tries to access your account, they won't be able to without the one-time code.

10. Install an antivirus software

Identity thieves may try to breach your Wi-Fi network, computer or smartphone if they're not secured. An antivirus software can detect and remove malicious software (malware) designed to to steal data. This software also scans email attachments, apps and other downloaded files for potential viruses.

11. Consider using a virtual private network (VPN)

Public Wi-Fi networks can be risky as they generally offer little protection and hackers could intercept your online activity. A virtual private network (VPN) can protect your sensitive information as you surf the web in your favorite coffee shop or library, for example. When you connect to a VPN, the software encrypts and shields your mobile device’s online activity.

12. Shred documents that contain personally identifiable information (PII)

Some identity thieves still rely on old-fashioned methods such as dumpster diving for credit card and loan offers, bank account statements, utility bills or medical bills. To prevent others from accessing your personal information, shred every document before disposing. Consider buying a paper shredder since a scammer may reconstruct a manually ripped paper.

13. Collect your mail daily

Fraudsters may steal your mail to get your name, date of birth, email address, phone number and other identifying information. Collect your mail every day and if you're going on vacation, contact your local post office to place up to a 30-day hold on your mail. You can make the request online at USPS.com.

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† LifeLock does not monitor all transactions at all businesses. No one can prevent all identity theft or cybercrime.

What are the types of identity theft?

Identity thieves can use stolen information in several ways. While many criminals use your personal information to open new credit card accounts or apply for loans, this is just the tip of the iceberg.

Yes, financial identity theft is one of the most common types, but criminals also use stolen personal data to receive medical services, apply for employment and even get their hands on your tax refund. Let’s go over the eight most common types:

Financial identity theft

Financial identity theft refers to instances when a person uses your data for financial gain. For example, a scammer might apply for a new credit card or loan, open a bank account or use your debit card to make an unauthorized purchase.

Employment identity theft

An identity thief may use your Social Security number or other personal information in order to obtain employment. This can happen when the person has a criminal record or a poor work history and is trying to pass a background check or meet the employment requirements.

Medical identity theft

In medical identity theft, an unauthorized person might use your information to obtain health care services or to fill out fraudulent insurance claims. A health care provider may also commit this type of fraud by submitting a claim to your insurance for procedures they never performed. In certain circumstances, this may lead to the criminal’s and the victim's health records getting mixed up, leading to misdiagnosis or inadequate treatment.

Account takeover fraud

Account takeover fraud, or credential theft, happens when someone gains access to one of your social media, financial or other online accounts. The person then makes unauthorized transactions — like withdrawing money or opening a credit card — or gathers more information to access other accounts.

Tax identity theft

Tax identity theft happens when a criminal uses your information to file a fraudulent tax return and collect the refund before you do. Most people realize they're victims of this fraud when the Internal Revenue Service (IRS) notifies them that more than one tax return was filed using their Social Security number.

Synthetic identity theft

Synthetic identity theft involves criminals combining real and fake information to create an entirely new identity — for instance, someone's real Social Security number but combined with a made-up name, date of birth and address. It's also possible for identity thieves to fuse factual information from multiple people to create a new identity.

In most cases, victims of ID theft can spot scams early on by checking their credit report for fraudulent activity. However, with this type of fraud, credit reporting agencies could potentially generate a new credit report for the fake identity. Lenders then report financial accounts or loans applied for with the fraudulent identity to the new report, making it harder for victims to realize someone misused their information.

Child identity theft

Children are also at risk of ID theft. Scammers may obtain your child's information from school or medical documents and use it to get a credit card or request government benefits, for instance. The individual often doesn't realize they've been a victim of identity theft until they're old enough to apply for student loans or open a bank account and get denied due to bad credit or employment history.

Criminal identity theft

Criminal identity theft involves a person providing your information (instead of their own) to law enforcement officials when being questioned or arrested. This is a rare circumstance, but it might lead to a warrant or a criminal record in your name.

How to report identity theft

Knowing how to report identity theft is essential to minimize the damage if your identity is stolen. ID theft victims should immediately report the incident to the Federal Trade Commission (FTC) online at IdentityTheft.gov or by phone at 1-877-438-4338. We recommend filing the report online as you'll get a step-by-step recovery plan and access to pre-written dispute letters for lenders and credit bureaus. You'll also get to track your ID recovery progress.

Filing a police report is also advisable since some lenders might ask for it before closing fraudulent accounts. If your information was stolen online, file an additional complaint with the FBI's Internet Crime Complaint Center (IC3).

To prevent further damage to your credit history, contact TransUnion, Experian and Equifax to notify them of the crime through phone or mail at:

Fraud Victim Assistance Department
P.O. Box 2000 Chester, PA 19016-2000
Phone: 800-680-7289

Equifax Credit Information Services
Fraud Victim Assistance Department
Consumer Fraud Division P.O. Box 740256
Atlanta, GA 30374
Phone: 800-525-6285

National Consumer Assistance
P.O. Box 9554
Allen, TX 75013
Phone: 888-397-3742

How to recover from identity theft

If a criminal used your personal and financial information to make purchases, get benefits, file taxes, or commit fraud, these are the steps you should take:

  • Report the fraud to the FTC at IdentityTheft.gov and file a police report with your local law enforcement agency.
  • Contact banks or creditors to inform them of the fraud and close compromised accounts.
  • Request a copy of your credit report from TransUnion, Experian and Equifax through AnnualCreditReport.com.
  • Review your credit report routinely to make sure new accounts aren’t opened in your name.
  • Place a security freeze and fraud alert on your credit report.
  • Write letters to the credit bureaus explaining the situation and include a copy of your FTC identity theft report and proof of your identity.
  • Update passwords on all your accounts and consider getting a password manager.
  • Consider an identity theft protection service or credit monitoring plan.
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† LifeLock does not monitor all transactions at all businesses. No one can prevent all identity theft or cybercrime.

How to protect yourself from identity theft FAQs

How does identity theft happen?

Scammers may steal your personal information through a data breach, phishing email, phone scams or by hacking your mobile device using an unsecured wireless network. Others might steal your wallet or purse or dig through your mail and trash for documents that include your name, phone number, home and email address or account numbers.

What is a phishing scam?

Phishing scams trick people into sharing private information or clicking malicious links with emails or text messages that look like they're from legitimate companies such as banks, online stores, social media sites or streaming services. The messages usually urge people to download an attachment or take action regarding a blocked account or outdated payment information. Once you click on the link or attachment provided, you'll download malware or get redirected to a website designed to steal your information.

How do I know if my identity has been stolen?

Check your monthly bills for unauthorized transactions and your credit report for new accounts you don't recognize. Be wary of unexpected changes in your credit score and missing mail. Another warning sign is receiving a notice from the Internal Revenue Service (IRS) or the Social Security Agency (SSA) regarding tax returns or government benefits you didn't request.

What do you do if someone steals your identity?

If someone steals your identity, report it to the Federal Trade Commission (FTC) online at IdentityTheft.gov or by phone at 1-877-438-4338. You should also file a police report with local law enforcement and notify your bank, credit card issuers and the main credit bureaus — Transunion, Experian and Equifax.

What is the best advice to prevent identity theft?

There isn't a fail-safe way to prevent identity theft. However, you can reduce your risk by reviewing your bank account statement, monthly credit card bills and credit report frequently. You can also set up a credit freeze and fraud alert, install antivirus software on computers and smartphones and use strong, unique passwords for each of your accounts. Don't forget to shred sensitive documents before tossing them and to leave your Social Security card and passport at home, preferably in a safe.

Summary of Money’s How To Protect Yourself From Identity Theft

  • Identity theft is a crime that involves someone stealing and using your information (such as your name, date of birth or Social Security number) to commit fraud.
  • Some signs of identity theft include sudden credit score drops, bills for accounts you don’t recognize and notices from your health insurance mentioning procedures you didn’t receive, among others.
  • There isn't a foolproof way to prevent identity theft. However, reviewing your credit report and bank statements regularly, using strong passwords and storing your Social Security card safely are some steps that may minimize your risk.
  • Other ID theft prevention measures to consider include investing in a password manager, security freezes and/or fraud alerts on your credit report and hiring an identity theft protection company.
  • If you detect any unexpected or unusual change in your financial, medical or tax records, this may be a sign that your identity was stolen.
  • If you’ve already become a victim of identity theft, you should report the crime to the Federal Trade Commission (FTC), file a police report, and contact lenders and the credit bureaus to report any fraudulent accounts.