Before an Identity thief can do anything, they first need to get hold of your personal information, such as your name, address, date of birth, credit card number and any bank details. If you lose that information, you can easily become a victim of Identity Theft

They can use a variety of methods ranging from simple theft to sophisticated on-line data collection:

1. They collect information from trash bins.

Make sure that you do not leave even your name on any discarded mail and shred any shopping receipts, bills and anything paid for on your credit card.

2. They may skim your credit card, with a special electronic device.

Always keep your card in sight when verifying a transaction.

3. They send scam letters or e-mails pretending to be from financial institutions.

Never respond to letters that look too good to be true or click on any e-mail links that appear to come from a financial institution unless you can be sure that they are genuine.

4. Thieves may change your billing address so credit card and bank statements go to them.

Get your financial statements and bills sent electronically if possible, but of you do so, make sure that you take all the other measures to protect your computer integrity.

5. They may steal your mail, wallet, or purse.

This is old style theft, but if can be the start of more serious crimes. If your mail contains pre-approved credit card offers, or other financial information they are in luck.

6. They may telephone financial institutions pretending to be you, if they have access to basic security details already.

With basic information such as your address and date of birth, they can get your mail redirected to themselves.

7. They may use a computer virus or trojan to collect information directly from your PC.

It is vital to protect your computer by installing up-to-date anti-virus and anti-spyware software. Use a firewall when you browse the Internet and encrypt and safeguard portable devices and documents on them.

8. They may collect information from social networking sites

If you put your details on Facebook for example, giving someone your date of birth is exactly the sort of information they need, so take care with your Privacy settings.

Don’t assume all the people you know are trustworthy, especially is you suspect that they have any financial problems.

Last year is is estimated by Javelin security that 13% of crimes were committed by people who know they victim.

Fortunately there are quite a lot of Identity Protection Services that protect you against a lot of these problems. Some of them such as LifeLock include a wallet protection service that can replace the contents of your wallet, including credit cards, after just one call.

All banks and credit card companies keep a record of your financial transactions and pass them on to the three credit bureaus, Experian, Equifax and TransUnion. They maintain your credit profile so that it can be provided to other businesses when you need to open accounts, borrow money, take out a mortgage or set up a new credit card.

You are entitled to a free credit profile report each year from each of the three credit bureaus, but you have to ask for it.

What your Credit Profile Contains

Your credit profile contains your name, address, previous addresses, loan and credit history, credit limits, payment records, inquiries, collection records and other public information such as bankruptcies and tax liens. These records can go back seven years!

From this information, a credit score is calculated as a quick reference to for lenders who can quickly evaluate your credit worthiness. Each Credit bureau, Experian, Equifax and TransUnion keeps its own credit score, and they may not all be the same.

Typically your credit score will be in the range of 300 to 850, with scores of over 700 being classed as ‘good’. A ‘good’ score will help you get the best credit deals and lower interest rates. However, your credit score can vary each time a new entry is made on your credit profile.

Checking your own credit score regularly is a good idea and will not affect your rating. Application for loans and other credit will cause your score to drop slightly.

What if it contains errors?

If you suspect that there are errors on your credit profile, you can get them removed by sending a dispute request in writing to the credit bureau. This has to be done to each one separately, as one will not pass on the information to the others. They have to investigate the dispute and respond within 30 days, and if they agree with you, remove the inaccurate information. However, any accurate facts will not be removed until they naturally expire.

Your credit profile is legally available to many people including courts, landlords, cell phone companies, potential creditors, insurance companies etc. In each case they will evaluate your finances before making lending decisions, but will often have to seek your permission before they do so.

Whatever you do, if you need to be able to borrow money in future, take out a mortgage, buy a cell phone, get a store card, and a host of other things, you need to keep your credit rating high. Therefore it is vital that anything wrong on your profile is corrected as soon as possible.

If you don’t have the time or the inclination to do it yourself, then it is best to get an identity protection company to do it for you. It may save you a great deal of trouble in the long run and save you from possible identity theft that could ruin your credit score for a long time.