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How to Protect Against Identity Theft Via Credit Monitoring

On the list of "must avoids" in life, identity theft is pretty high up on the list – right there between a root canal and rooting for the Cubs.

Studies vary on the impact of identity theft on Americans, but the Federal Trade Commission says 10 million Americans were victims of identity theft in 2008. A separate study from Javelin Research jacked that number up to 11 million in 2009.

How badly identity theft impacts you depends on how well prepared you are. The FTC reports that two-thirds of all identity theft victims who uncovered the crime within

five months of the incident, did not have to pay any out-of-pocket expenses.

Clearly, the lesson learned is this: If you want to minimize the impact of identity theft, the earlier you uncover it (or better yet, avoid it), the better off you'll be.

What is identity theft? In a word, identity theft occurs when your personal financial data is compromised without your permission. Examples include using a credit card or Social Security number in your name, opening a bank account under your personal I.D., or applying for a job using your Social Security number.

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How can you protect yourself from identity theft and what should you do if you become a victim?

There are specific steps you can take to protect yourself from becoming a victim of identity theft. One of the best ways is to subscribe to a credit monitoring service – one that can shield your personal information, monitor your credit and resolve fraud issues if you should ever become a victim.

Early detection is a big key to stopping fraud promptly. Credit monitoring services will monitor your credit reports daily (preferably), weekly or monthly to spot any fraudulent activity.

If a breach occurs, a credit monitoring service will alert you immediately (usually within 24 hours, but often sooner), thus helping you curtail financial losses and protect your credit record. If you have already been a victim of identity theft, the credit monitoring service can help by notifying your creditors and also by placing a "fraud alert" at the three credit bureaus: Equifax, Experian and TransUnion. Many credit monitoring services also offer zero-liability guarantees against fraud, as well as resources to help you recoup any losses.

What kind of identity breaches do credit monitoring services look for specifically? By and large, credit monitoring services will alert you if there have been changes in the following personal financial areas of your credit reports (all in your name):

  • A new address
  • A new employer
  • New credit inquiries
  • New credit accounts opened
  • Late payments
  • Any upgrades or improvements to your credit score
  • Any bankruptcy information

While most credit monitoring firms will offer you the option of notifying the authorities (like banks, credit card companies and law enforcement agencies) yourself, some will handle that task for you, including follow-ups and updates on the I.D. theft in question.

Expect to pay anywhere from $10 to $30 per month for a decent credit monitoring service (depending on how comprehensive your identity theft coverage may be).

But if you value your personal financial data, and place a high priority on preventing identity theft, then credit monitoring could well be the way to go.