Most of us have dealt with fraudulent credit card charges at some point, and cancelling the card usually solves it. Identity theft is a different, more severe problem, because what gets stolen, your Social Security number, for example, can’t just be replaced.
Start with your passwords
Identity theft happens when someone steals your personal information, from your Social Security number to your date of birth, and uses it to open credit, steal a tax refund, or make purchases in your name. Most people have dozens or hundreds of online accounts, and many of those have been exposed in data breaches you may never have been notified about. Check Have I Been Pwned to see whether your email addresses or passwords have shown up in a known breach. If you reuse the same password across accounts, one breach compromises all of them, so use a unique, complex password for every account, and store them in an encrypted password manager rather than trying to memorize or write them down.
Layer on two-factor authentication
Once your passwords are unique and secured, turn on two-factor authentication for every financial account you hold. With two-factor authentication, a stolen password alone isn’t enough to get in, the account also requires a code sent to your phone or a biometric confirmation. It also doubles as an early warning system: an authentication request you didn’t initiate is a strong signal someone is trying to access your account.
Freeze your credit and watch your cards
Everyone in the U.S. can get one free credit report annually from each of the three bureaus, Equifax, Experian, and TransUnion, through annualcreditreport.com. Beyond checking your reports, freezing your credit with all three bureaus blocks anyone, including you, from opening new credit in your name until you lift it. Keep it frozen by default and only lift it temporarily when you’re actually applying for something. On the credit card side, set up fraud alerts via text or email, and remember credit cards generally give you a much longer window to dispute fraudulent charges than debit cards do, which usually cap you around 30 days.
Don’t skip the boring stuff
Shred any personal documents before you throw them out, credit card statements, utility bills, mortgage statements, using a cross-cut shredder rather than a strip-cut one, since strips can be reassembled. Avoid checking financial accounts on public WiFi without a VPN, and stay alert for phishing emails. None of these steps are exciting, and yes, they add small inconveniences, like a phone call before opening a new credit card. But weighed against the cost and hassle of actually recovering from identity theft, they’re worth it.
Educational only, not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
