Identity theft is when someone other than you uses your personal information to make purchases, get cash, or otherwise take advantage of a situation by pretending to be you. Millions of Americans fall victim to identity theft at some level every year, and the victims often lose money and have their credit history damaged or ruined by false charges. The people who perpetrate these identity theft crimes often find the personal information they need by going through your trash to take pre-approved credit card offers or credit card receipts; by stealing a wallet or purse; by posing as a phone solicitor and asking for your personal information (date of birth, SSN, etc.); by looking over your shoulder as you access ATMs, and a variety of other ways. Recovering from identity theft can be a long and laborious process, and, like in many instances, prevention of identity theft is often the best medicine.

Features to look for identity theft prevention services

To a large degree, preventing identity theft comes down to some common-sense guidelines:

-Don't carry important documents like your social security card, passport or birth certificate with you unless you need them that day.

-Minimize the number of credit and/or debit cards that you carry with you on a daily basis.

-Create a list of your credit card and bank accounts with contact numbers so that you can contact them in the event of a lost or stolen card.

-Contact your credit card and/or bank as soon as you realize you may have lost or misplaced your credit or debit card(s).

-Always lock your vehicle door when shopping.

-Place store receipts in a secure place, such as your purse or wallet, while you are shopping.

-Never throw your receipts away- either keep them in a secure place or shred them.

-Buy a shredder and make a habit of shredding old credit card and bank statements, utility bills, and new credit card offers you receive in the mail.

-Check your credit card and bank statements every month to look for suspicious or unauthorized charges.

-Make the PIN to your accounts random, instead of obvious birthdays or words that would be easy to guess. Never carry your PIN with you in written form!

In addition to these common-sense identity theft prevention measures, there are companies and prevention services that you can find online that can be powerful tools against this form of theft.

How to find the best identity theft prevention service for you

Sometimes, you will not know you have been a victim of identity theft until you apply for a loan or credit card, or even get a notice from your insurance company that your rate has gone up due to changes in your credit report. Some red flags to detect if you have been a victim of identity theft include: your credit card or bank statement shows charges that you don't recognize; you fail to receive your statements at the normal time of the month; you receive calls from creditors trying to collect from debts that you do not recognize.

Protecting yourself from identity theft starts with an understanding of your credit report so that you know what is on your report and can look for any discrepancies. If you do not know what is on your credit report, your first step in identity theft prevention will be to obtain your credit report. In addition, you should subscribe to a service that will:

-Monitor your credit report on a continuous basis, and let you know if there are any changes to your credit report. Suspicious activity will be brought to your attention, and you'll receive notifications if any new accounts are opened up in your name, or if any derogatory information is added to your credit report.

-Do much of the work on your behalf to assist you in the process of correcting your credit report to restore your credit rating. This includes contacting the credit reporting agencies and all of your creditors.

-Provide you with monetary reimbursement (sometimes up to $25,000 and above) for certain expenses you might face while working to restore your credit score, including legal defense costs, lost wages for the time spent away from work, notarization and postage costs for affidavits or similar documents, application re-filing costs for loans that may have been denied as a result of your identity theft, and more.
 

Without such an identity theft service, you may spend a considerable amount of time and effort (and lost productivity) trying to manage the various processes of restoring your credit: keeping organized records of your correspondence and phone calls; dealing with creditors and collection agencies; sending letters to the three credit reporting agencies, and so on. There might be significant legal expenses, as legal representation is sometimes required to effectively deal with creditors and others who might choose to dispute your claim that the charges were fraudulent. Again, paying for this service upfront may be a lot less painful that dealing with it after the fact.

As you evaluate your needs for identity theft protection and start comparing services, pay attention to how the services are priced. Generally, services that you hire before any identity theft occurs are cheaper than those you would need to hire after identity theft has occurred. This is because the preventative services spread the risk over a larger group of people (sort of like insurance).