An identity theft occurs when somebody steals vital pieces of personal data information, e.g. your social security, credit card numbers, etc. and uses that data information for financial gains by taking your identity. The most common form of identity theft involves credit card and mortgage frauds. But it can also be used for vicious crimes like drug dealings, terrorism, etc.

You may be surprised to know that many minor identity thefts are committed by someone you know. So, don’t make it an simple job for a person to steal your personal info from your wallet, checkbook, etc. Avoid leaving things containing your personal information lying around for others to have an easy access to that personal info.

Buy a cheap paper shredder from an office supply store and shred all your paid bills, used check books, etc. before tossing those items into the trash. Put aside 30 minutes every Saturday morning for shredding anything that contained your personal information that you intend to trash. Make it a habit.

Never give out your personal information like your social security number; birth date etc. over the phone when the call is received unsolicited. Your financial institutions have that information and they will not ask you for that. Sometimes, for verification purposes, they make ask you the last four digits of your social security number.

Don’t pay anybody to get a copy of your credit report. Because of a congressional mandate, all three-credit report bureaus will give you a copy of your credit report for free every year. Go to AnnualCreditreport.com to obtain your free credit report every year from TransUnion, Equifax, and Experian. While obtaining your free credit report, these bureaus will push some paid services. You are not required to accept the offers.

Don’t get your free credit reports from the three bureaus all at the same time. Then you have to wait one year before you can get your reports again for free. In the mean time, some unwanted stuff may show up in your report. Get your free report every four months from each agency. If you are using a PDA, password protect it to prevent others from using it.

Phishing is a popular method to steal information for identity theft purposes. Do not be a phishing victim. Avoid clicking on any link that comes to your way through e-mails or IM. The e-mail will disguise itself coming from your financial institutions (your bank or PayPal accounts) and will urge you to click a link to verify your accounts or resort to such other tricks. Sometimes, it can be outright threatening. If you click the link you will end up in the thief’s website. And if you enter your user name and password, the thief will have enough information to log into your actual account.

Open online accounts for all your credit cards and financial accounts. Online accounts are not only convenient for faster bill paying, paperless transactions, etc.; they also help monitor your accounts frequently, instead of waiting for the monthly bill or statement to arrive. Check your accounts online every week and if you see any suspicious charges, checks, etc., call you banks immediately. Setup e-mail based account alerts, to alert you when charges are made to your accounts.

Avoid putting your outgoing mail containing bills and checks in your mailboxes for easy access by a thief. Deposit them in mailboxes located in the post office or street corners. Better yet, setup online bill payment with your bank and avoid the snail mail for bill paying.

You also need to keep your computer safe. Thieves can get into computers through spyware and unsecured wireless or network connections. Use anti-spyware programs and turn on your Windows default personal firewall program. To prevent viruses infecting your computer, use an anti-virus program. Setup accounts for each user of your computer and ask them to use strong passwords that include a combination of letters and numbers.

A frequent way to prevent identity theft anybody, including you, from opening any credit in your name is to freeze your credit account. This choice is not available in all fifty states. If it’s available in your state and you choose this option, you need to lift the block before you allow anybody, e.g. an employer for a new job, creditor for a car loan, etc., to access your credit information.