Identity theft is one of those crimes that can substantially ruin your financial life. Identity theft is caused when some one gains access to your personal details and social security number and uses it to steal your money by using your credit details or opening a new credit in your name. According to FTC almost 10 million American citizens are victims to identity theft every year.



In most of the cases people do not realize that their credit is being used by another person until they are denied a loan from the banks on the basis of poor credit history or when collection agencies knock their doors.

However the American states consider this to be a major crime and have passed two legislative provisions to protect identity theft.

1. security Breach Notification: If a person's data is lost or stolen from the various organizations that collect consumer's information, Breach Notification requires these agencies that collect consumer's data to alert or notify them that the data is lost or stolen. Thus the accounts and statements can be closed before any harm is done or to avoid further harm to one's credit dealings.

2. Credit Report Security Freeze: Security Freeze allows the citizens to freeze access to their credit report so that no new accounts can be opened. One can create his own password to access his credit report at the three major credit reporting agencies. This way no one can gain access to an individual's credit reports and no new accounts can be created unless the password is provided by the concerned person.

It is of immense importance that one goes through his or her credit report at regular intervals of time and be aware of his own credit activities to avoid identity theft. One can request for his credit report from the three major credit reporting bureaus, Experian, Equifax ? and TransUnion ? for free once in a year.

Checking credit card statements on a monthly basis is also a practice that is being encouraged a lot. I would be stating the obvious if I said that one should not give away his or her SSN easily to any organization without knowing the reason.