How to Prevent Identity Theft: A Practical Checklist

Identity theft can lead to financial uncertainty. If you’ve received a data breach notice, noted a suspicious text message in regards to your financed or discovered an unfamiliar charge on your bill, you might be at elevated risk of ID theft. Loan and lease fraud are steadily growing concerns because digital platforms have made it easier for scammers to impersonate borrowers and lenders, as well as advertise fraudulent offers. According to the Consumer Sentinel Network Data Book, the Federal Trade Commission received 1,135,291 reports of identity theft in 2024. This is up from 1,036,855 reports in 2023. Additionally, of the 2024 reports,176,400 involved loans or leases, compared to 149,803 the previous year.

Recognizing the warning signs, protecting your personal information, and responding quickly can help limit the damage and safeguard your finances. If identity theft has already impacted your credit or bank account, recovery can take time, particularly when you need cash for unexpected expenses. This practical checklist covers how to prevent identity theft, as well as what to do if it just happened to you.

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How Identity Theft Happens and Why Loans are a Target

Identity theft occurs when someone steals your personal or financial information and uses it without your permission. This information may include your Social Security number, bank account details and credit card numbers, as well as other personally identifying information. Ceriminals can obtain these details through data breaches, phishing emails, fake websites, scam text messages or stolen documents.

Once these bad actors have your information, they can attempt to use it to make unauthorized purchases, withdraw money from your bank account or open new credit accounts in your name. What’s worse is you might not discover the problem until you notice unfamiliar charges, receive an unexpected bill or see an account you never opened on your credit report.

Loans and leases are common targets for ID theft because criminals can use stolen information to apply for financing. Someone might take out a personal loan or sign a vehicle lease using your name and personal details. You could then face collection calls, unpaid balances and damage to your credit history for something you never got. Recognizing these risks could help you spot suspicious activity early and take steps to protect your identity and finances.

Warning Signs Someone is Using Your Identity

Identity theft isn’t always easy to spot. The perpetrator may use your personal information for weeks or months before you realize something is wrong. Watching out for the following warning signs may help you catch suspicious activity early and limit potential damage to your finances and credit.

• Missing Bills and Account Statements

Someone may have changed your mailing address without your permission if certain bills or account statements suddenly stop arriving in the mail. Contact your creditors to learn why you’re no longer receiving them.

• Unfamiliar Charges Or Unauthorized Withdrawals

Review your statements each month and report transactions you don’t recognize to your bank or card issuer. Most credit cards and bank accounts can be set up to issue alerts via text message or email when transactions occur. Signing up for them is a good idea.

• Unfamiliar Accounts On Your Credit Report

It is important to review your credit reports periodically. You can get yours for free once per year at AnnualCreditReport.com to look for accounts you never opened. An unfamiliar credit card, personal loan, or vehicle lease may indicate someone is using your identity to obtain financing.

• Collection Calls For Debts You Don’t Recognize

A criminal may have borrowed money or opened an account in your name, leaving you to deal with the consequences. Ask the collections person to provide you with all of the information about the loan, including when it was opened, the amount borrowed and the company that provided the loan.

10 Steps to Prevent Identity Theft

In order to minimize the risk of identity theft, here are 10 actions you can take depending on your individual circumstances:

1. Freeze Your Credit

Contact Equifax, Experian, and TransUnion to freeze your credit for free. A freeze does not affect your credit score and helps prevent criminals from opening new credit accounts in your name. When you need to apply for a loan or other credit, you can temporarily lift the freeze through the bureau’s website or phone system, then reinstate it afterwards.

2. Know When to Use a Fraud Alert

A fraud alert asks lenders to verify your identity before opening new credit in your name. An initial alert lasts one year, while an extended alert lasts seven years for eligible identity theft victims. Contacting one credit bureau is enough to request an alert; that bureau must notify the other two.

3. Check Your Credit Reports

Review your credit reports regularly for unfamiliar accounts or suspicious activity. Free copies of your credit reports are available at AnnualCreditReport.com, the only federally authorized website for free credit reports. Avoid look-alike websites that charge unnecessary fees or request sensitive information.

4. Guard Your Social Security Number

Share your Social Security number only when necessary. Be suspicious of unexpected calls, emails or texts requesting it – even when the sender claims to represent a government agency, bank or employer.

5. Use Strong Passwords

Create strong, unique passwords for your financial accounts and email. Enable two-factor authentication whenever available to add another layer of protection.

6. Decline Unexpected Requests for Information

Do not respond to unsolicited calls, emails or text messages asking for personal or financial details. Contact the organization directly using a verified phone number or website. Text messages are a commonly reported method of contact for fraud.

7. Protect Your Mail and Documents

Shred documents containing account numbers, Social Security numbers or other sensitive information before discarding them. Collect your mail promptly and consider secure delivery options for important documents.

8. Enable Bank and Credit Card Alerts

Set up notifications for purchases, withdrawals, transfers and other account activity. Alerts can help you identify and report unauthorized transactions before further damage occurs.

9. Secure Your Vehicle Title and Registration

Keep your vehicle title and registration in a safe place. Avoid leaving sensitive documents in your vehicle unnecessarily and be cautious about sharing copies of them. These documents can contain information that individuals could use to commit vehicle-related fraud. Keep your title in a secure place, avoid posting photos of your title or registration – or your full VIN – online, and know which lender, if any, holds a lien on your car.

10. Keep Your Accounts and Identification Private

Never share account logins or lend your identification to someone who claims they need it to make a payment or complete an application. Even if the request comes from someone you know, letting someone use your identity can expose you to financial losses and legal complications.

How to Spot a Scam Lender

Scam lenders often promise quick cash or easy approvals, especially to people facing financial pressure or credit challenges. Knowing the warning signs can help you protect your money and personal information before agreeing to a loan.

• Murky Licensing Status

Start by checking whether the lender provides a valid license number and identifies the company behind the offer. Legitimate lenders should be willing to explain their licensing status and provide clear information about their business. Be cautious if a lender avoids questions, provides inconsistent details, or refuses to identify its legal business name.

• Upfront Payment Demands

Another red flag is a demand for upfront payment. Scammers may claim you must pay an insurance premium, processing fee, or other charge before your loan can be funded. Requests to pay by gift card, wire transfer or cryptocurrency are particularly suspicious. Be wary of high-pressure tactics, such as claims that an offer will be voided unless you act immediately.

• Vague Loan Terms

Always request written loan terms before agreeing to borrow. These should clearly explain the amount borrowed, the interest rate, Annual Percentage Rate (APR), the fees, the repayment schedule and the total cost of the loan.

Visit your state’s financial regulator’s official website to search for licensed lenders or find contact information on a prospective one. Confirm the information matches the company’s legal name and type of loan offered. Never rely solely on a website, advertisement or license number provided by the lender.

What to Do if Your Identity is Stolen: First 24 Hours

While discovering someone has stolen your identity can be stressful, acting quickly can help limit the damage. Your first 24 hours should focus on reporting the theft, protecting your accounts and documenting what happened.

• Report the Identity Theft

Visit IdentityTheft.gov, the Federal Trade Commission’s official website, to report the theft and receive a free personal recovery plan. Spanish-language assistance is available at RobodeIdentidad.gov. Follow the recommended steps for your situation.

• Protect Your Credit

Contact Equifax, Experian or TransUnion and place a fraud alert. Doing so with any one of the bureaus will automatically trigger notifications to the other two. Fraud alerts require potential lenders to take additional steps to verify your identity before opening a new credit account. As previously mentioned, you can also freeze your credit with the bureaus to help prevent the opening of new accounts without your authorization.

• Review Your Credit Reports

Look for unfamiliar credit cards, loans, leases or other accounts. Report suspicious activity to the credit bureaus and the lender. Again, free copies of your credit reports are available at AnnualCreditReport.com.

• Check Your Accounts

Review your online bank and credit card statements for unauthorized purchases, transfers or withdrawals. Contact your financial institutions immediately to report suspicious transactions and secure affected accounts.

• Keep Detailed Records

Save confirmation numbers, emails, letters and copies of reports. Record the dates of phone calls and the names of representatives you speak with. These records can help you track your recovery efforts and dispute fraudulent debts.

When Fraud Hits Your Wallet

Identity theft can cause financial problems that extend beyond stolen information. Unauthorized withdrawals may cause a bank account to be overdrawn. Fraudulent loans or credit accounts can damage your credit history. Even after reporting the fraud, you may incur immediate expenses while your financial institution investigates.

The first thing to do is contact your bank or credit card company and dispute unauthorized transactions. Report the activity promptly, inquire about recovering any lost funds and follow the institution’s instructions to secure your accounts. If fraudulent accounts appear on your credit report, contact the affected lenders and credit bureaus to dispute them.

Ask creditors for payment extensions or manageable payment plans if you’re struggling to cover your bills because identity theft has compromised your finances. Local assistance programs, community organizations and nonprofit agencies may also offer help with essential expenses such as utilities, housing and food.

Depending on your circumstances, borrowing may be another option, but consider the costs carefully before taking on new debt. Car title loans may be one option. They’re secured by your vehicle’s title, meaning your vehicle serves as loan collateral. They don’t require perfect credit, and you can keep your vehicle throughout the loan period if you make your payments on time.¹

Understanding how to avoid scams could be the difference between keeping your financial information safe and falling victim to identity theft. It’s also important to be careful to work with reputable lenders when seeking loans. LoanMart-serviced loans are fully transparent and we do everything possible to keep your data safe. Apply today!