Identity theft is a huge issue, seriously affecting more than 9 million people a year according to estimates from the U.S. Federal Trade Commission.

Identity thieves steal information and use it to open credit cards, finance mortgages, buy vehicles, activate cell phones and even acquire health care (and bills).

Major companies like Sony, Zappos, Yahoo!, and others have admitted that their customers’ information had been compromised. I have personally had debit and credit cards go through this process.

ID theft can take weeks, sometimes even years and thousands of dollars to fix if your credit and identity is compromised!

With all this going on, what can you do to protect your good name and credit?

There are multiple services out there, such as Life Lock, that can do credit monitoring and credit locking for you, for a price. But, if you’re like most folks struggling in this economy, you may not have $110 – $275 a year to have someone keep an eye out for you. Of course, as couponers, we are always looking for ways we can do it ourselves and save a boatload of money.

What you can do on your own:

1. Regularly Check Your Credit Report

Get free credit reports from all three credit reporting agencies, TransUnion, Equifax, and Experian. By federal law, you are allowed one free, no strings attached, copy of your credit files per year. Go here for more information and the link to free reports. By looking at your credit reports, you can see anything that may be wrong or misreported, or possible identity theft attempts. If you see anything strange, be sure to contact the credit reporting agencies to report it! Contact all other companies involved, and let them know of the identity theft. Contact your local police department, as well.

2. “Freeze" your credit file

This is one of the few options that offers a proven prevention method to identity theft altogether! For existing identity theft victims, freezing credit can limit further damage. A credit freeze is essentially freezing your credit accounts in place and not allowing the credit agencies to release your credit report in order to obtain new lines of credit. For example, if you put a freeze on
your credit, and someone has stolen your information and tried to get a home loan in your name, the credit reporting agencies would not even allow a credit check to let that person apply or receive any loans. The same would apply for anyone trying to get a credit card, a car loan, or anything in your name. Frozen credit can be "thawed" or unfrozen when you need to open a new line of credit at any time by just contacting the credit reporting agencies again. There is usually a small fee associated with "thawing" and "freezing" your credit each time. But for most of us, freezing and thawing our credit only a couple times a year (or less) is far cheaper than paying $10–$15 a month! In some states, parts or all of this process may even be free! Check here.

3. Only shop Internet sites that are secure

Online shopping opens the door to identity theft. Make sure to use virus protection software and keep it up to date. Put a firewall in place. Make sure the URL of the website begins with  “https://” and the page displays an image of a locked padlock.

4. Don’t shop online with a debit card

An ID hacker who gets their mitts on your back account can wipe you out, and there is no way to get the money back. Most credit cards have consumer protections for such events. Don’t have a credit card? Consider investing in a pre-paid credit card for online shopping. If an ID thief cracks the card, they’ll only get the money there and nothing else.

In the event that you are one of those poor souls who will be hit with ID theft this year or in the future, the FTC has a great guide on what to do and how to get through the process of getting things back to normal. Some employers have recognized ID theft as a major problem and now offer services to their employees. Ask your HR department at work and see if you have Identity Theft benefits, which can give you professional help for free.

4 Ways to Avoid Identity Theft