Identity theft occurs when someone takes your private information — Social Security number, driver's license number, credit card numbers, bank account numbers, place of employment, and even family information, such as your mother's maiden name — and uses that information to pillage your bank and credit card accounts or to open new accounts using your information.

According to the Federal Trade Commission, in 2004, consumers between the ages of 25 and 44 were most likely to become victims of identity theft. Thanks to the electronic age of buying online, paying online, and banking online, identity thieves have become adept at finding just what they need — your personal identity information, your bank account numbers, or your credit card numbers.

According to Liz Pulliam Weston, author of Your Credit Score, identity theft affects more than 10 million people a year. The Federal Trade Commission survey found that 27.3 million Americans had become victims of identity theft in the past five years.

This results in $48 billion in annual losses for business and institutions; $5 billion in out-of-pocket expenses for consumers; and 300 million hours spent by consumers trying to cope with its consequences. It's wise to take precautions and stay vigilant about protecting your personal and financial identity.