There are many threats faced by consumers these days, but the problem of identity theft is surely one of the most serious.  Identity theft attempts have been growing in sophistication for a number of years now, and it is important for all consumers to know how to spot these schemes, and how to recover in the event they become a victim of one of these scams.

When thinking about the problem of identity theft, it is important to consider the importance of your personal financial reputation.  To a potential lender, your credit file and financial information is your identity, and it is this reputation and identity that identity thieves are after. 

Identity criminals attempt to use the positive financial information of others in order to take out loans, get credit cards and perform other financial transactions. These fraudulent actions can wreak financial havoc on those who are victimized, and it can take hundreds of dollars and over a hundred hours of hard work for victims of identity theft to recover their good names and their financial reputations.

Identity theft attempts take many forms, but one thing they all have in common is that they attempt to capture personal and sensitive information from the individual being targeted. 

This information can include things like Social Security numbers, account numbers, passwords, birth dates and other such information, and in many cases only a few of these items are required in order to steal the identity of another.

After that information has been appropriated, the criminal uses it to open new credit card accounts, take out loans, and otherwise interfere with the financial life of the victim.  One of the worst parts about the crime of identity theft is that, due to the nature of the crime, victims often do not realize that their personal information has been compromised until long after the breach has occurred.

In some cases the first indication of a problem is when the victim receives a call from a collection agency or credit card company inquiring about an unpaid bill.  For many identity theft victims this is the first indication that a problem has occurred, and by that time it can be quite difficult for creditors and individuals to sort out the fraudulent transactions from the legitimate ones.

One of the most important steps individuals can do to protect themselves is to carefully review a copy of their own credit report at least once a year.  Simply reviewing your credit report for unauthorized new accounts and inquiries can go a long way toward keeping identity thieves at bay and minimizing any damage they can do.

See also: How can I can request free copies of my credit report?

If you spot an inquiry you did not authorize, or an account you do not recognize, be sure to report it to the credit reporting agency immediately.  Also be sure to contact the bank that issued the credit card, initiated the inquiry or provided the loan, and tell them that fraud has occurred. 

The faster you can provide notice of identity thef, the better off you will be and the more damage you will be able to prevent.

See also: How to prevent identity theft