Identity theft is a serious problem that can damage consumers’ financial history and personal reputation, and it can take years to unravel. The number of U.S. adult victims of identity fraud decreased from 10.1 million in 2003 to 8.4 million in 2007, according to the 2007 Identity Fraud Survey Report released by Javelin Strategy and Research.

Consumers who are worried that their financial information has fallen into the wrong hands can now place a “fraud alert” on their credit line. Fraud alerts help prevent anyone from opening new accounts in your name. They act as a red flag on your credit report, visi-ble only when businesses access your file to possibly extend you credit.

“Fraud Alert is an effective tool that can prevent identify theft before it begins,” said Nessa Feddis, senior federal counsel, American Bankers Association, Washington, D.C. “It puts any creditor or user of a credit report on notice that the consumer may be a victim of identify theft and that they should contact the consumer and verify the identity of the person who is applying for credit.” It’s a good idea to put a fraud alert on your credit report when your personal identification information has been compromised, Feddis said.

To place an alert on your account, call one of the three credit reporting agencies and ask them to flag your credit file for fraud. An alert will be attached within 24 hours, and your name will be removed from preapproved credit and insurance applications for two years.