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The following is a guest post by Chris Holdheide of Stumble Forward.com. Enjoy!
How Identity Theft Can Affect Your Credit
Most people don't quite realize the turmoil that identity theft can cause with your credit until it's too late. Instead of being proactive about their information and their identity, they wait until someone steals it and costs them thousands of dollars or more. Why wait until something horrible happens? Why not learn what you can do to take a better approach to protecting yourself?
Maybe it's because you may not understand what all identity thieves can actually do with your information to tank your credit. Let me show you some of the different ways that your information can be used to really hurt your credit and some quick ways to prevent them:
Credit cards –
Once an identity thief has your information, they can then open new credit cards in your name that come to their location. They then set the pin number and set it up to where they can use it and you get the bill. When they get the card, they go crazy spending until either they hit the limit on the card or they are finally cut off. No matter how much they spend, it's going to affect your credit when you get a bill you cannot pay.
To prevent this from happening you keep track of your credit cards closely by monitoring you credit reports and bank statements for any suspicious activity. You may also want to consider a credit monitoring service such as CreditKarma.com, which is total free.
If you are unlucky enough to have your identity stolen, someone can put utilities for their home in your name. They then run up a bill until it gets turned off and you are stuck with the bill. Sometimes, you may not know this until it appears on your credit as the identity thief ignores calls and bills for the amount.
To prevent this from happening to you, simply check over your utility statement with a fine tooth comb, but sometimes this isn’t enough to catch the criminals before it’s too late. This is where an identity theft protection program can come into can come into play and inform you of these issues before they become a problem.
Gaining your identity can also open the door for them to order checks in your name. They can then use these anywhere they want that doesn't take too much in the form of identification, allow the checks to bounce, and then the amount to be placed on your credit. What's even worse is that you can also get criminal charges out of this as well, and depending on how large the checks are, they can be felonies that remain on your record forever.
Again, to prevent this from happening, it comes down to monitoring your banks activity with your account. The other problem is that it’s way too easy for criminals to order these checks, so make sure you keep all of your statements this way you have proof it wasn’t you writing the checks.
When a thief gains your information, they can then apply for loans in your name. These can be anything from small loans to larger, home or car loans. When you then default on these loans (as they have no intention of paying your bill), it goes on your credit, and collection agents will then start the process of suing you for the amount.
To prevent this, monitor your credit reports by checking them as often as possible. However, this isn’t always possible, and this is why I suggest you also look into a credit monitoring service or identity protection program.
Online accounts –
Normally, an identity thief can gain all of the information they need to allow them access into any of your online accounts. PayPal, eBay, Amazon, and many other sites that hold your financial information can be hacked into using the information that they have. Then, they can gain access to your credit cards, debit cards, checking account numbers, and order things in your name shipped to their location.
To prevent this, first off, make sure that you create strong passwords for your accounts. The best way to do this is to make sure your password is at least 10 digits long, contains upper and lower case letters, numbers, and at least one symbol. Finally, make sure your online accounts are all different from any other accounts you use. Doing this will make it nearly impossible for any hacker to break.
If someone using your identity is arrested by the police or other law enforcement, they can give your information to the police. They can bail out of jail with your information, skip bond, and run up bills in your name as well. Or, they can use your information to commit a crime and then the police are looking for you instead of the actual criminal. This can cause you severe problems with law enforcement and cost you thousands of dollars in legal fees to clear it up.
This is probably one of the worst case scenarios that could happen to you. In fact, I’ve seen situations where the police have even arrested the wrong person for writing bad checks in their name. Preventing this can be tough to do, and this this is where a good identity theft program can come into use to help you along the way.
Of course, on top of these areas, the lost money that it will cost you can total thousands of dollars or more. It will cost you time to dispute charges, time to go to court, time to file paperwork and reports, and to deal with fixing the mess that they have left behind. It can cost you more than just time and money; it can cause you to lose your house, your car, your job, and more.
The good thing is that if you simply start to be proactive in protecting your identity, you can put a stop to all of this before it ever starts. Protect your information online and be careful when giving out or ordering anything over the phone, online, or through the mail. You can also safeguard your email by changing the passwords constantly and deleting emails that have any type of personal information or links to it. At home, ensure that you are checking your mail and not allowing it to sit in your mailbox for any length of time.
As I also mentioned early, a great step that you can take is to enroll identity fraud insurance that will help to keep your information safe as well as provide protection for you if someone tries to steal your identity. There are several excellent companies out there that provide different types of identity theft protection, helping you to take a more proactive approach to keeping your information safe.
I recommend to everyone I know this type of extra protection for your information. Not only can these companies notify you if someone tries to use or gain your information, but they can offer piece of mind. Protection against identity thieves can help to save your credit, your money, and your time.
How about you all? What steps do you take to protect yourself and your credit history from identity thieves? Do you feel that identity fraud insurance and other protection programs are worth the money?
Share your experiences by commenting below!
***Photo courtesy of http://nopsa.hiit.fi/pmg/viewer/images/photo_5166889979_038b630e4f_t.jpg