"We need education in the obvious more than investigation of the obscure."
- Oliver Wendell Holmes, Jr.
It seems like a new identity theft horror story makes the rounds every day, stirring up panic, paranoia, and concern all over again. But here's a dirty little secret about this seemingly intractable problem: in most cases, it is completely, 100% avoidable! That's right - with some conscientious planning and common sense habits, you can lower your risk of identiy theft to almost zero. You see, the problem isn't just that ID thieves are getting smarter (which they are.) The real problem is that everyday citizens are getting dumber! Don't let yourself fall into that category. Instead, follow these 7 tips and rest assured that ID thieves will be shut out in the cold.
1) Use a paper shredder
The bedrock of any sensible ID theft prevention strategy is a good, old-fashioned paper shredder. If nothing else, you should be shredding all invoices, credit card statements, or sensitive printed information that you intend to throw away. Once shredded, you can add another layer of protection by tossing the shreds into a garbage bag containing disgusting things like old food, dog droppings, or anything else an ID thief would hate having to sift through. If you have a fireplace, burn your private information during the winter months.
2) Do not own or use unnecessary credit cards
It should go without saying that every credit card you own increases your exposure to identity theft. Unfortunately, the average American owns multiple credit cards, including rewards cards and store-specific cards. If you have too many cards, strongly consider ditching them! Not only will it lower your risk of identity theft, it will also help your credit score, as people with more cards are percieved as risky because of all the debt they could charge to them.
3) Set a reasonable spending limit on the cards you do own and use
The one or two credit cards you keep should have reasonable spending limits. Experts suggest that $100-$500 is a good rule of thumb, as even in the worst-case scenario, an ID thief spending that amount would probably not be devastating to your finances. If your cards do not have reasonable spending limits already, set them now.
4) Examine unfamiliar/suspicious e-mail with the scrutiny of a hawk
It may not be 1998 anymore, but it's astounding how many people are still, in 2008, taken by obviously fake e-mails that appear to come from their bank, investment company, or other institution. Learn this and learn it cold: no reputable institution will ask for your password, account confirmation, or sensitive data in an e-mail, especially not out of the clear blue or because of a "recent computer failure" or any such nonsense. E-mails that sound like that were made up by scammers to fool you into handing over your information. Don't give it to them!
5) Lock all personal information and documents in a safe
These days, there's just no excuse for leaving your birth certificate, Social Security cards, or other private data out in the open. No matter where you live or how safe you think you are, these things should be secured! If you don't own one already, go out, buy a safe, and lock your important documents inside. It's a valuable layer of protection in the event of a breaking and entering, and you'll be glad you have one!
6) Use services like PayPal that shield your bank details from others
If you make online payments, consider using services like PayPal, which allow you to make and recieve payments using only an e-mail address. In this way, the people you do business with will only see your e-mail address, not your actual bank account number or routing number. Only PayPal will have that information, which they never share. It's just sound practice to give people as little private information as you can, and PayPal can be a great means to that end!
7) Pull your credit reports twice a year (at least)
Your credit report will offer obvious clues if someone has stolen your identity - for example, whether any new accounts have been opened, or whether anyone has pulled your credit report since you last checked. These are things you need to know, and the best way to find out is to request access to your credit report at least twice a year. Make sure to check all of the 3 major bureaus - Experian, Equifax, and Trans-Union.