3 Ways to Keep Your Financial Identity Safe
by Maurie Backman | Updated July 17, 2021 - First published on May 2, 2020
A few simple moves could help you stay safe from an identity thief.
When we think about people falling victim to identity theft, it's easy to imagine it won't happen to us. But data compiled by Experian reveals that it's actually a major concern.
Identity theft accounted for nearly 14% of all consumer complaints in 2017. Meanwhile, that year saw 133,015 reports of credit card fraud, 82,051 reports of employment or tax-related fraud, and 50,517 reports of bank fraud. All told, consumers reported $905 million in fraud-related losses in 2017.
If you're worried about becoming an identity theft victim, there are a few measures you can take to safeguard your financial data. Here are a few to start with.
1. Shred documents containing your personal information
You know the bank and credit card statements you receive in the mail? If those were to get into the wrong hands, the results could be disastrous. The same holds true for any documents listing your Social Security number. The solution? Spend $50 on a shredder, and use it to dispose of documents you don't need to keep that contain sensitive data. Many shredders are even equipped to destroy credit cards, which is a smart thing to do for accounts you've closed or no longer use.
2. Be judicious about sharing your Social Security number
Your Social Security number is a key identifier for wage- and tax-tracking purposes, and there may be times when you're asked to give it out when you're not actually required to. Though you do have to provide your Social Security number to open a savings account or apply for a credit card, you don't have to give it out when you're signing up for a store loyalty card, seeing a healthcare provider, or applying for a job.
Store loyalty cards track your spending but aren't linked to a credit card or bank account, so your Social Security number should not be needed. And while an employer will need your Social Security number to verify your identity once it's made you a job offer, you shouldn't have to provide that information earlier on in the application process. Finally, it's common practice for medical offices to request your Social Security number -- but they actually shouldn't need it. Often, it gives healthcare providers protection in the event they need to track you down for unpaid bills. If anything, provide the last four digits of your Social Security number when medical offices insist -- but try to avoid sharing it in its entirety.
3. Create different, hard-to-breach passwords for different accounts
Once a criminal gets hold of one of your passwords, that person will likely use it to access as many of your accounts as he or she can. You can minimize the damage in that scenario by assigning different passwords to different accounts. For example, you might create one password for your email, another for your bank account, another for your credit card, and another for each social media account you use.
Along these lines, be sure to create strong passwords that criminals can't just guess at. If your name is Sally Jones and your birthday is May 1, 1995, "sjones95" is not a secure password. Anyone who learns your name and date of birth can play around with combinations and guess it. As such, your best bet is to use passwords that have nothing to do with you at face value. For example, if your favorite food is pizza, your favorite state is California, and you happen to like the number 8, a password like "pizzCAli8!" might work. Notice how it uses a combination of lower- and uppercase letters, a number, and an additional character -- the exclamation point.
Of course, remembering unique passwords for what could be a dozen or more different websites could be challenging. Rather than strain your memory, get a password generator tool like Last Pass for your computer. With one of these tools, each time you go to create a new account, your password generator will create a password for you that's extremely difficult to breach (think something along the lines of "qrHbz49H!fGjHs$W" -- something you'd never remember). Those passwords will be added to your personal vault on your computer, which you'll unlock with one master password -- one you should be able to remember. That way, you could, conceivably, have 20 different hard-to-breach passwords out there without having to remember each one.
Identity theft can take many forms. It can involve someone stealing your Social Security number, filing a tax return on your behalf, and collecting your refund. Someone could get hold of your credit card information, buy things on your account, and stick you with the bill. Or, it could mean someone accessing your checking or savings account and withdrawing money -- your money. In other words, identity theft is scary stuff, but if you make the above moves, you'll be less likely to join the ranks of the many thousands of Americans who are victimized.
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