Imagine having worked hard for years in order to save up enough money for a down payment on your first home. Then imagine walking in to the bank to secure your mortgage and finding out that you've been denied because someone else racked up hundreds of thousands of dollars in debts under your name.
According to the US Federal Trade Commission, 9 million Americans have their identities stolen each year. It can happen all too easily: An unauthorized person gets your personal information -- your name, Social Security Number, credit card or checking account number -- and uses it to commit fraud, racking up charges that never get paid and end up ruining your credit.
Anyone can become a victim of identity theft -- you, your spouse, even your kids. The FTC estimates that about five percent of identity-theft cases involve children. While many of those thefts were committed by the child's parent or another family member, anyone with a Social Security Number can be at risk.
How do you know if your identity has been stolen? You may notice a strange charge on your credit card statement. You may get turned down for a loan. You may get a call from a bill collector about an account you didn't know you had. There are hundreds of ways you can be affected and, by the time you find out, it could take years of legal wrangling to clear your credit and your name.
The best way to handle identity theft is to minimize the chances of it happening to you. Here are 10 ways you can protect yourself and your family:
1.) Opt out of credit card pre-approval offers. Those little letters saying you've been pre-approved for some fabulous card can be a gold mine for an identity thief. Call or write the credit companies and remove yourself from their mailing lists (check the fine print; information is usually included on the back of each offer).
2.) Destroy documents that could be used to access your credit. In 2006, Rob Cockerham decided to see if a torn-up and taped-back-together credit card application would be accepted. To up the ante, he requested that the new card go to a completely different address, and provided a cellphone number for account activation. Less than a month later, Chase approved the MasterCard application anyway. Bottom line: It's not enough to tear up a credit card application and toss it in the trash, as most credit-card companies suggest you do. Use the mailings for kindling in your fireplace, or shred the documents finely.
3.) Check your credit report regularly. The Fair and Accurate Credit Transactions Act of 2003 entitles all US residents to receive a free credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) every year; you can get yours online at www.annualcreditreport.com or by calling 877-322-8228. Want to check more frequently? For a fee, credit-monitoring services allow you to access your credit report quickly and often. Family Secure, which is part of Experian, offers a great plan that monitors your entire family's personal information for signs of credit-related activity; for $19.95 per month, they'll send you an alert if anything pops up, help you resolve any disputes, and allow you unlimited access to your Experian credit report and credit score.