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Consumers can’t be lazy when it comes to protecting identity, credit scores

Computer hackers are waging war against consumers. Four in 10 adults may have had their personal information compromised last year, according to AARP; 12 percent have had their identities stolen within the past 12 months.

As Americans increasingly switch from cash to cards or other forms of electronic payment, the risk of fraud and identity theft rise, too. Consumers must protect themselves — by vigilantly monitoring their credit history and sounding the alarm if they notice anything suspicious.

The outbreak of identity theft shows no signs of slowing. This year, hackers have breached more than 720 companies — a 25 percent increase over last year.

Most Americans aren't paying attention. Experts call it “data breach fatigue.” Almost one-third of consumers have ignored notifications that their personal data had potentially been compromised.

The consequences of identity theft can be more severe than a few unauthorized charges; if criminals get hold of a person's credit information, they can ruin his financial future.

Americans are already stretched thin. Thirty-five million — almost 15 percent of all adults — push more than $2,500 in credit card debt to the next month. If a hacker adds onto that tab without the person or bank noticing, the average consumer could find himself unable to make a payment. That could be disastrous for a person’s credit.

A credit report details virtually every debt a person has accrued, from a monthly student loan tab to the unpaid balance on a credit card from last month.

A credit score is essentially a grade for a credit report that lets lenders know how likely a person is to default on a payment. The scores can vary depending on the scoring system used but generally range from 300 to 850. The higher the number, the lower the risk that the borrower will default.

A missed payment can drive that score through the floor. If a person misses even one payment, a credit score can drop by 60 to 90 points.

Depending on the person's overall credit history, it could take years to recover. Missed payments remain on a consumer's credit report for seven years — even if he catches up on them.

Fortunately, consumers can fight back against identity thieves — and protect their credit histories in the process.

To start, consumers should be sure to review their credit report regularly — and to watch out for signs of fraud. Every American is legally entitled to one free report each year through AnnualCreditReport.com. Yet nearly two-thirds have not reviewed their credit report within the last 12 months.

Consumers should also ensure that they shop safely online. Criminals can steal passwords and sensitive financial information from computers on unsecured, public wireless networks. Once they're online, shoppers should look for the “lock” symbol on their browser to ensure that their information is transferred securely.

Finally, consumers should scrutinize their credit card and bank statements each month for charges they don't recognize. Such charges can be the first sign of identity theft. Credit or identity monitoring services can help consumers in this effort by alerting them to potentially fraudulent activity.

With data breaches happening on a seemingly daily basis, it is more important than ever for Americans to actively protect their personal information. Consumers must take charge of their financial futures. Vigilantly monitoring their credit is one essential step in doing so.

Rod Griffin is the director of public education for Experian, a global information services group.