With breaches and identity theft becoming more commonplace, protecting your credit has never been more important.

Fortunately, you can proactively defend your personal information and your credit score. Implementing protection against credit fraud can save you from long-term financial damage and stress.

Why credit fraud protection matters

Credit fraud can negatively impact your credit score in numerous ways. If someone steals your personal information, such as your Social Security number, they could open new accounts in your name or make unauthorized charges.

Missed payments on these fraudulent accounts can quickly damage your credit, leading to higher interest rates and loan denials. Coming back from identity theft can take months or even years. That’s why taking proactive steps to protect your credit is essential.

Proven strategies to thwart credit fraud

1. Use credit freezes and fraud alerts

Credit freezes and fraud alerts are two of the most effective tools for preventing credit fraud. Here’s how they work:

• Credit freezes make it nearly impossible for identity thieves to open new accounts in your name. They also prevent new creditors from accessing your credit report. A credit freeze is free to place and lift and does not affect your credit score. To set one up, you’ll need to contact Equifax, Experian, and TransUnion, provide your info, and verify your identity.
• Fraud alerts require creditors to verify a person’s identity before opening new credit accounts. An initial fraud alert lasts for one year and can be renewed. If you’re a victim of identity theft, you can place an extended fraud alert that remains active for seven years.

2. Monitor credit and financial accounts

One of the simplest ways to catch fraud early is to monitor your financial activity regularly. To do this, you should review your credit reports from Equifax, Experian, and TransUnion every year at AnnualCreditReport.com.

Beyond requesting credit reports, consider enrolling in credit monitoring services that provide real-time alerts for suspicious activity. Frequently checking your bank accounts and credit card statements for unfamiliar charges or transactions can help you act fast to prevent further damage.

3. Secure personal information

Your data is a target for fraudsters, so protecting it online and offline is crucial. You’ll want to create strong passwords that combine letters, numbers, and special characters. Avoid info like your birthday or pet's name, as it’s easily guessable. For extra security, enable two-factor authentication that requires access to your text messages or email on financial accounts and other sensitive logins.

Be wary when providing sensitive information over the phone, too. Verify the legitimacy of any individual requesting personal details. Shredding documents with personal or financial info before you dispose of them will prevent dumpster drivers from accessing your data.

4. Be vigilant with online activity

You'll want to follow a few best practices to safeguard yourself from cybercriminals trying to steal your identity. Only make purchases on secure websites where you see "https" in its URL. Don’t access financial accounts on public wi-fi networks.

Additionally, look critically at emails, texts, and social media messages that attempt to trick you into providing personal information. Phishing messages often look legitimate, but the telltale signs are the email address, the URL, and poorly produced graphics.

5. Protect your cards

To minimize risk, keep your credit and debit cards secure and never leave them unattended. To limit exposure if a card is compromised, use separate cards for subscription services and daily spending.

Watch for skimming devices on ATMs and gas pumps (look for broken seals) and cover your PIN whenever you enter it. Selecting credit cards with advanced security features, like EMV chip technology and contactless payment options, can also decrease your vulnerability.

If a card is lost or stolen, immediately report it to your card issuer so they can freeze your account and issue a new card. You’ll also want to contact the three credit bureaus to place a fraud alert that warns potential creditors. The Federal Trade Commission (FTC) further allows you to file an identity theft report at IdentityTheft.gov.

Smartly managing your credit can lead to smoother car buying

Credit fraud can happen to anyone. Freezing your credit, enabling fraud alerts, and regularly monitoring your accounts will significantly reduce your risk. This vigilance will serve you well when it comes time to buy a car. If you’re ready to purchase a vehicle now, Credit Acceptance works with over 15,000 dealers nationwide, and you can get pre-qualified for auto financing online.