Identity theft happens through several routes: data breaches that expose your details from a company's database, phishing attacks that trick you into providing them directly, mail theft of financial documents or pre-approved offers, oversharing on social media, and purchasing data from brokers or dark web markets.
The consequences extend far beyond immediate financial loss. A fraudulent credit account in your name damages your credit score, preventing you from getting loans or mortgages. Disputing fraudulent accounts and correcting credit reports takes months of correspondence and documentation.
A credit freeze is the most powerful preventive measure available for identity theft. While frozen, no new credit accounts can be opened in your name without your explicit unfreezing action. It does not affect your existing accounts or credit score. Place one with each major credit bureau in your country if identity theft is a concern.
Check your credit report regularly. In many countries you are entitled to free annual reports from each bureau. Look for accounts you did not open, addresses you do not recognize, and inquiries you did not initiate — these are the earliest warning signs.