My close encounters with ID theft

This guest post comes from Silicon Valley Blogger at The Digerati Life.

Most of us don't know it, but it's pretty likely we've faced down identity theft more often than we've realized. Often, we think that this is the kind of stuff that happens to other people. Advice on how to prevent identity theft is something we don't usually heed, until it hits close to home.

• Bing: Identity theft horror stories

In my case, I've encountered identity fraud a few times, fortunately at a reasonable arm's length (but close enough for me to feel concerned).

The most memorable case was also the most frightening one, as it involved some trespassers who had entered our property in the middle of the night. We heard loud noises by our utility shed and assumed we were hearing a late-night garbage bin raid by an army of hungry raccoons. Instead, we spied furtive shadows carrying off our trash bins to a pickup truck that sped away into the darkness. 

It's National Protect Your Identity Week, sponsored by the National Foundation for Credit Counseling and a new partner in this event, the Council of Better Business Bureaus. Here's some related reading that you'll find very informative.

·         Find 'shredding parties' in your state

·         Are you safe? 10 questions to find out

·         Steps to take if you've been victimized

·         Questions on identity theft? Ask an expert

We eventually found our trash cans dumped by the side of the street a block away, without much of anything left inside. I'm certain that the raiders were not sanitation engineers working overtime, but rather identity thieves out to get information on our household. Thank goodness we've had the habit of shredding our sensitive documents for a while now. Those guys didn't get away with much of anything except dirty diapers.

In another case, I wasn't paying enough attention to my surroundings. During a vacation, my spouse and I put our valuables in the trunk of our rented vehicle in a crowded parking lot, but little did we know that we were being watched. When we returned to our car, our valuables were gone, including our driver's licenses, identification cards and credit cards, which could easily be used to steal our identities. We took quick steps to cancel our cards and report the issue to authorities.

Others I know weren't so fortunate:

• I have a relative who had neglected to check on his bank account for an extended period of time. When he finally got around to inquiring about some financial details with his banker, he discovered that there were no less than five other names attached to his Social Security number (along with five different accounts) at the bank. Clearly, someone had been using his SSN to open new accounts. This might have been addressed more quickly if my relative had been monitoring his account more carefully.
• And what about a friend who told me about how a new tenant at the apartment she had previously occupied stole her identity by opening credit card offers addressed to her there? If she had taken the steps to reduce junk mail, she might have sidestepped this problem.

Before any of us find ourselves in this unfortunate position, it may serve us well to check out a few ways to help avoid becoming a victim of identity theft:

How to protect yourself from identity fraud

Get a shredder. As my particular personal story shows, I believe it's imperative for every household to own a shredder. I feed mine with anything that has any vestige of my identity on it: name, address, account numbers, you name it. Try to get the kind that turns everything to confetti, so you can make sure there's no way your information can ever be recovered by anyone.

Monitor your credit. One way to make sure that your identity and credit are not being compromised is to check your credit reports regularly. While many people are more comfortable paying for credit monitoring -- third-party services that proactively alert you to irregularities in your credit report -- it's a better idea to do your own credit watch because it's cheaper. In fact, you can get your credit reports for free from AnnualCreditReport.com, where you're entitled to one report per year from each of the three major credit bureaus.

To obtain your FICO score, which is not readily available for free, you may want to check out myFICO.com as a reputable resource. Or try this free score estimator. 

• How to get free (sort of) credit scores

Maintain good records. Being organized can really help you spot things that may be amiss. Regularly reviewing your accounts and keeping good financial records will go a long way to helping you stay on top of your financial affairs, and may also help you spot suspicious activity in your accounts right away. In fact, using budgeting tools (I would recommend a tool like You Need A Budget (YNAB)) or reviewing your expenditures on a regular basis will not only help you with managing your money, but will also unearth errors, mistakes and even questionable transactions in your accounts.

Protect your sensitive documentation. I try to take extra steps to secure personal information that can be used to hijack my identity. While shredders are great for paperwork, I've also worked to track my information better -- by keeping forms, bills and documents organized at home, or by using a safe-deposit box when necessary.

Online, we can make our data more secure by changing our account passwords on a regular basis. It may also help to be wary of where you shop (particularly online) and to whom you give your information. Also, the fewer transactions you do, the less risk you face of anyone stealing your information. Other great ideas include paying in cash more often or having a secondary mailbox (P.O. box) for less important mail.

• Phishing: A real-life example

Be vigilant. When out in public -- recall my vacation story above -- don't let your guard down. By using basic common sense and caution, and by being aware of our surroundings, we can do a lot to minimize the threat of fraud entering our lives.

What to do if you suspect ID fraud

Do you suspect that you're a victim of ID fraud? Here are a few things you can do to address your situation:

• Put a fraud alert on your credit reports as soon as you suspect something. Request a security freeze as well.
• Close all compromised accounts and contact all financial institutions you do business with to inform them of your concerns.
• Contact the Federal Trade Commission and file a report.
• Contact the police department in the appropriate jurisdiction.
• Inform the Social Security Administration about issues with your SSN and file a fraud report with http://www.ssa.gov/.

By taking sufficient precautions, we can do a lot to avoid becoming yet another identity fraud statistic.

Related reading at The Digerati Life:

• Best high-interest savings accounts
• Best online stock brokers for cheap stock trades
• Best credit card rewards programs