Identity theft is one of the biggest problems in the financial sector and can be detrimental to victims of it. With the technological age at a peak, the ease of which thieves can access your identity is a whole new high. There are many ways to prevent identity theft and measures to take to recover after being victimized by identity thieves, but once of the best ways to guard yourself against identity theft is to understand how it works and how it affects your credit.

Credit is a fickle thing and though it is regulated by three major reporting agencies and a mass of government bureaus there are still mistakes made and crimes committed. It is your responsibility as a consumer to help protect your own credit and report wrong doing. Identity theft can occur from someone stealing a wallet or purse which usually contains an ID, check book with banking information, credit and other cards and sometimes a birth certificate and Social Security Card. You should never carry your SSN or birth certificate with you. There should be a copy in a home safe and the originals should be in a safety deposit box. But, these items when gathered together are a prime score for a theft who can then go and use your existing cards or apply for new accounts, often before you even know the stuff is missing. Many banks and credit card companies will now help to monitor your accounts to watch for unusual spending habits and purchases, but this is not completely safe.

Once a theft has done something with your identity or current accounts, it’s only a matter of time before the accounts or balance default and you start to receive harassing phone calls and letters demanding payment on a debt you know nothing about. The longer the debt has been there the more difficult it is to get off your credit report, especially if you failed to report the identity theft or have no way to prove the account was not opened by you. This then creates bad accounts, lengthy arguing and disputes with creditors and the reporting agencies all the while your credit score is dropping and you are finding yourself with a hard time getting the credit and approvals you have worked hard for.

This situation can be overwhelming and detrimental and some people never recover from identity theft. It can ruin your credit, especially if you are not on guard or on top of your credit report on a regular basis. Take the time to learn about credit reports and scores and how identity theft affects them and what you can do to find a way to prevent identity theft from happening to you. If you do become a victim of identity theft, it’s vital you report it immediately and start working to recovery from the incident as soon as you notice something is wrong.

With a little work and some diligence you can learn how identity theft affects your credit and take the steps necessary to prevent it from happening to you and your family while also putting together a recovery plan in the event of identity theft that will help you spring back fast and with minimal repercussions to your financial future and well being.