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How to Protect Your Credit from Identity Theft

Written by: Kristy Welsh

Last Updated: April 19, 2017

If you have read some of our other articles about identity theft, you must certainly have noticed the rise, year after year, in the number of victims of ID fraud and stolen identities. Desperate times bring out desperate measures and people with poor credit, no money, and no scruples have gone the way of figuring out how to steal another person's identity to better their situation. Don't become another statistic - be proactive and learn how to protect your credit from identity stealing thieves.

Why Protect Your Credit?

Credit, second only to your family and your time, is the most important asset you possess. The difference between having credit or not can be the difference between freedom and oppression, between opportunity taken and opportunity denied.

In every other system in this country, you are innocent until proven guilty. Not so with your credit. All a creditor has to do is say that you were late or delinquent in your payments and it goes on your record. It's up to you to prove conclusively that you were in fact, not late. If you don't have any proof, your creditor wins and you lose. This is especially frightening if someone steals your identity, because even if you are innocent, it will cost YOU money to go to court, track down documentation, hire lawyers, etc. Your creditors cannot be held liable as there is no way they could have known you were a victim of fraud. If, in the unlikely event you can find and identify your identity thief, chances are slim you will be able to recover costs from him/her for your efforts to clear your name. In other words, this will cost you a fortune to clear your name, all non-refundable. It's worth the effort to take precautions against this happening to you.

How Does a Credit Rating Affect You?

In today's society, it is not your word or character which incites the most trust, but your credit rating. Without a good credit rating, you can't open a checking account, rent a car, get a credit card, buy a house, get a small business loan, get a student loan; the list goes on.

And what if your credit is not hopeless, but just damaged? You pay a large price in increased fees and interest rates on credit cards, car loans, and home loans. Increased credit costs due to poor credit can add up to thousands of dollars a year. Believe us, it is worth your time and effort to safeguard your credit rating.

How You Can Protect Your Credit?

The most important things you can do to safeguard your credit:

  • Buy a Shredder.  Shredders are inexpensive and can be bought at any office supply store. Buy one and use it religiously. It is the cheapest and easiest way to protect your privacy. Shred any paperwork containing personal information before it hits the trash can. Dumpster-diving is the practice of looking through trash for personal information and is the most common method that identity thieves use to get personal information. Here are items you should certainly shred.
    • Credit card applications you get in the mail
    • Any credit card receipts
    • Pay stubs, bank statements, and bank deposit receipts
    • Utility bills
    • Old tax returns
    • Anything containing your Social Security Number
  • Review Your Credit Report at Least Once a Year.  You can obtain all three credit reports for free once a year from AnnualCredtiReport.com. You can also obtain your reports from a variety of other companies - here is a great article with all the information on credit report offers. It is so easy to get copies of your reports that you have no reason not to review your credit reports reqularly.
  • What to Look For on Your Report.  If you find incorrect information, don't panic. Use our credit repair methods to challenge accounts you know aren't yours. It could just be a mistake.
    1. Are all of the credit lines on the report yours? Make note of each one.
    2. Review all the credit inquiries. Are there excessive inquiries found on your report? Can you account for all of them? Excessive inquiries could mean that someone is trying to get credit in your name. Use our methods of challenging these inquiries if you want to find out more information.
  • Other Items to Look for on Your Credit Report.  You will want to keep your report tidy and in the best possible shape for when you get the sudden urge to apply for new credit. Don't wait to clean up your report, do it now. You should also note that it is becoming an new industry practice to raise rates on existing credit card rates if other credit lines go delinquent. Once a credit card company raises your rate, it is difficult to get them to lower it again, even if your credit report has been corrected.
    • Is old credit (like closed accounts, old delinquent marks) on your report that should come off? Credit lines which have been closed or had no activity for 7 years should not be on your report, including derogatory credit.
    • Look for any late payments and see if they are they accurate.
    • If you have joint credit, pay attention to the current balances on these accounts. Were you aware of any high balances?
  • Secure Your Paperwork. The saddest tales of all are when people you know steal your identity. You don't think this happens? Read our article on Family Fraud. How to do secure your paperwork? Buy a file cabinet and LOCK it or rent a safety deposit box. Obviously, a safety deposit box is not as convenient as a file cabinet, but if you don't trust the people around, it is a great option. What kind of paperwork should you lock away from prying eyes?
    1. Credit card statements
    2. Pay stubs
    3. Bank statements
    4. Utility bills
    5. Tax returns
    6. Anything containing your Social Security Number
  • Get Your Name Off Mailing Lists. The less paperwork being sent to your house with pre-approved credit cards, the better. Some identity thieves don't wait for those applications to get into the trash, they steal them right out of your mailbox. Here is an article on ways to get rid of junk mail.