How to Prevent Financial Identity Theft: Steps to Protect Your Finances

Introduction

Financial identity theft occurs when someone uses your personal information to make purchases or access your accounts without your permission. It’s a serious crime that can have devastating consequences for its victims. According to a study by Javelin Strategy & Research, “there were 16.7 million victims of identity fraud in 2017 alone, with each victim losing an average of $1,343.” Fortunately, there are steps you can take to protect yourself from this type of fraud.

Steps to Prevent Financial Identity Theft

If you’re concerned about becoming a victim of financial identity theft, there are several steps you can take to protect yourself. Here are some of the most important:

Monitor Your Credit Reports Regularly

One of the best ways to protect yourself from financial identity theft is to monitor your credit reports regularly. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year. Checking your credit reports regularly will help you spot any suspicious activity and take action quickly if you do become a victim of identity theft.

Use Strong Passwords and Store Them Securely

Creating strong passwords and storing them securely is also essential for preventing financial identity theft. Weak passwords are easier for criminals to guess, so it’s important to create passwords that are at least eight characters long and include a combination of letters, numbers, and symbols. It’s also important to store your passwords securely, either in a password manager or in a secure physical location.

Secure All Devices That Access Personal Information

Any device that accesses personal information—such as your computer, smartphone, or tablet—should be secured with a passcode, fingerprint, or facial recognition. This will help keep criminals from accessing your personal information if your device is ever lost or stolen.

Don’t Give Out Personal Information Over the Phone or Online

You should also never give out your personal information over the phone or online unless you know who you’re dealing with and trust them completely. Criminals may try to pose as representatives from legitimate companies in order to obtain your personal information. If you’re ever unsure, hang up and call the company directly using the contact information on their website.

Use Encryption Software for Online Financial Transactions

Finally, you should always use encryption software when making online financial transactions. Encryption software scrambles the data that is sent between your computer and the server, making it much more difficult for criminals to intercept and steal your personal information.

Conclusion

Identity theft is a serious problem that can have devastating consequences for its victims. By taking the steps outlined above, you can significantly reduce your chances of becoming a victim of financial identity theft. Monitoring your credit reports regularly, using strong passwords, securing all devices that access personal information, not giving out personal information over the phone or online, and using encryption software for online financial transactions are all important steps to take to protect yourself financially.