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Safeguarding Your Identity: A Guide to Protecting Your Credit

Imagine waking up one morning to find that your most personal information – everything from your Social Security number to your mother’s maiden name – is no longer under your control and someone else is using that information to obtain credit in your name.

In 2022 alone, that was the reality for more than 1.1 million Americans

Identity theft, where some bad actor assumes your identity with the intention of committing fraud, theft or other crimes, is an increasingly thorny problem in the modern world. Becoming the victim of this kind of crime can wreck your credit, devastate your finances for months or even years, damage your purchasing power and put you under tremendous emotional strain.

If you’re working through the steps to eventually obtain a mortgage loan and buy a house, you need to be proactive about safeguarding your identity (and your credit) from would-be thieves – and we’re going to tell you the best strategies to take.

First, Understand How Identity Theft Happens

While it does still happen, gone are the days when you only had to worry about some nefarious soul rummaging through your trash to look for canceled checks and other personal information they could use. 

These days, you have more to fear from the frequent data leaks from companies that you’ve entrusted with your information. Sometimes, mistakenly clicking a link in an email is all you need to do to jeopardize your personal data. The “Dark Web” is a notorious marketplace where everything from bank account passwords to Social Security numbers can be had at low prices.

You also need to be concerned about the people in your life. While nobody wants to think that they cannot trust their relatives, friends or roommates, roughly 51% of new account fraud victims say that they actually had a personal connection to the fraudster.

Second, Keep Your Guard Up Everywhere

Protecting your identity is an ongoing process, so you have to be constantly vigilant. This means:

  1. Guard Your Paper Documents: Unless you live alone or with just your spouse and children, you need to keep your personal information out of everybody else’s reach. Store all your important documents (birth certificate, SSN, insurance policies, tax returns and bank account information) in a locked box or safe.
  2. Don’t Carry Unnecessary Paperwork: Learn to leave the vast majority of your credit cards and other documents at home, where they’re secured. You shouldn’t have your SSN card in your wallet, for example. 
  3. Invest in a Cross-Cut Shredder: Encourage the few identity thieves who still search through trash for information to look elsewhere. Before you throw away any credit card statements, bank records, old medical information or anything else that’s personal, shred it. Make sure you also shred expired bank cards and old credit cards.
  4. Be Cautious on Social Media: Avoid sharing sensitive information like your full birthdate, home address or other personal details on social media. Cybercriminals often use this information to piece together your identity – and they have AI software that makes it easy across multiple platforms.
  5. Use Strong, Unique Passwords: Where your online accounts are concerned, opt for complex passwords that combine letters, numbers and symbols. Avoid using easily guessable information like your children’s birthdays or names. 
  6. Enable Two-Factor Authentication: Two-factor authentication requires you to provide a second “proof” of identity to log into a site – often a code sent to your phone or your email. While you may find it time-consuming and a little bit annoying, do it, this gives you an extra layer of security to keep someone from remotely accessing your account.
  7. Regularly Update Your Software: Keep your operating systems, apps and antivirus software up to date on all your electronics. Cybercriminals often exploit vulnerabilities in outdated software to gain access to unprotected devices.
  8. Be Wary of Phishing, Smishing and Vishing: Fake emails that look real (phishing), text messages that seem to be from a company you know (smishing) and phone calls from what seems like a trusted organization or the local authorities (vishing) can all fool people into giving up their personal information. Even clicking a link can sometimes allow a scammer to remotely access your electronics and drain all the personal info you keep there.

Where online security is concerned, it’s important to remember that you need to take the same precautions on Netflix or Instagram that you do on your banking app or credit card account. Identity thieves only need to find a small way into your world to wreak a lot of havoc. 

Finally, Monitor Your Financial Records

Regularly monitoring your financial accounts is another great approach to detect and mitigate potential identity theft, so get in the habit now to protect yourself in the future. 

Routinely review your bank, credit card and other financial statements for any unauthorized transactions, and report discrepancies immediately. Look for small charges that you (and your spouse) don’t recognize since those can sometimes be “tests” by a digital fraudster to see if a bank account or credit card is active.

In addition, you need to check your credit reports regularly for suspicious activity or accounts you don’t recognize. Many credit card companies now offer credit monitoring services as part of their appeal, so take advantage of that if you can. At a minimum, however, you should request free credit reports from all the major credit bureaus annually and review them for any strange activity or inaccuracies.

It’s also wise to simply keep your eyes and ears open for the latest data breaches and the newest scams. If you find out that a company you do business with – whether it’s a retail store or a hospital – has had a data breach, you may need to invest in a credit monitoring service or freeze your credit to keep your information from being misused.

When it comes to identity theft, the long and short of it is that you cannot be too careful. This is especially true when you’re trying to build your credit and fulfill your plans for a future that involves a mortgage. If an identity thief strikes at just the wrong moment, your dreams of homeownership could be derailed for quite a while. Remember, safeguarding your identity is not only a personal responsibility but also a long-term investment in your financial and emotional well-being.