There are many ways in which someone can steal and use your identity for fraudulent purposes, but some of the most common are:

1. credit card fraud
2. telephone service open accounts for wireless or phone service in your name
3. banking - open or gained access to bank accounts with new name
4. fraudulent loans like car loans in your name
5. obtaining government documents like drivers' license or Social Security cards

This can harm your credit records, reputation, and career. It can make you subject to calls from debt collectors, and can disrupt your daily life when you are denied for loans, bounce checks, or are rejected for credit cards. Sometimes identity theft creates a criminal record in your name, and often leaves you responsible for large, unpaid debts.

But how do criminals "steal" your identity? Oftentimes, it's done by "dumpster diving," or sorting through trash to find documents with your name, account numbers, and other personal information. It can also be done by diverting mail, on the Internet, or by posing as an employer or landlord to gain access to your credit information.

The Treasury's Financial Crimes Enforcement Network (FinCen) has recently reported that the amount of reported ID Theft cases doubled in the last year, making it the most common white-collar crime in the country.

So, what do you do to PREVENT someone from stealing YOUR identity?

1. Guard your Social Security number, PIN code, passwords, address and phone number very carefully - when you give this information make sure it is kept confidential, don't give this info unless you've initiated contact by mail, phone or Internet.

2. Sign up for an Internet service that will tip you off if your identity is being compromised. The best service is called Credit Insight from Equifax at or at 866-IDGUARD. It costs $49.95 a year, gives you a 30-day free trial, and provides you with weekly updates about your credit reports and immediately notifies you by email of any suspicious activity, so you can stop it right away.

If you've been victimized, here's what you can do:
1. Contact the fraud departments of credit bureaus.
2. Contact your creditors to explain the situation.
3. File a report with local police, and get a copy to send to credit bureaus , your bank, your credit card companies, etc.

The Federal Trade Commission has a booklet on their website called "IDTheft - When Bad Things Happen To Your Good Name." It tells you how to guard against identity theft, the latest schemes afoot, and what to do if your identity has been stolen
 

If your identity has been stolen call the FTC Identity Theft hotline at 1-877-ID-THEFT (1-877-438-4338) for help.

Jordan E. Goodman is America's Money Answers Man. He is a regular contributor to Public Radio International's The Marketplace Morning Report appears frequently on NBC's The Today Show, PBS, MSNBC, CNN, CNBC, and Nightline. For 18 years, Mr. Goodman was on the editorial staff of Money magazine, where he served as Wall Street correspondent, in addition to his role as weekly financial analyst on NBC News at Sunrise for 9 years.

He is the author of Everyone's Money Book  (over 200,000 copies sold) with 6 special focus editions on College, Credit, Financial Planning, Real Estate, Retirement Planning and Stocks, Bonds and Mutual Funds and the co-author of Barron's Dictionary of Finance and Investment Terms.