Despite the headlines, personal risk of identity theft is actually low. This is because, in recent years, banks and other financial institutions have tightened their security procedures.

To make transfers out of your bank account, more information (such as a pin number, a pass phrase, or your signature) is normally required. It is vital that this information is not disclosed to anyone. Even if your identity is compromised, the chance of anyone having enough information to make transfers out of your bank account is extremely remote. There is, however, a small risk that a fraudster may attempt to obtain loans or other goods, such as mobile telephones in your name. To do this they will have to pass a credit check, which will be carried out using your personal details. However, this can be stopped.

You can protect yourself from identity theft with CIFAS - The UK's Fraud Prevention Service, who operate a Protective Registration scheme. If you register with CIFAS they will make sure all the credit reference agencies are notified that your identity information has been compromised. When this is done, if anyone applies for credit in your name, a further set of checks will be triggered before the loan can be authorised. This will take the form of:

• Contact being made with yourself by the lender, to confirm your identity that you have made a loan application, and the details within that loan application.
• The option for you to specify your own password, without which the loan application can not be progressed.

This Protective Registration is a very effective way of combating the effects of identity theft. It does slow down the process of obtaining credit, until you provide the additional proof of identity that lenders will ask for, but this is a small price to pay in order to prevent a fraud being perpetrated in your name. Protective Registration can be set up by phone, e-mail, fax or mail. CIFAS will ask for:

• Your full name, date of birth, address and postcode
• Previous addresses and postcodes, if you have moved in the last 5 years
• The names of anyone else living at your address, and their date of birth
• Your employment information.

In addition, you can set up a personal password to restrict the opportunities for credit to be generated in your name. The form is available from the CIFAS on 0330 100 0180. Once your information has been received, Protective Registration will become active within 24 hours and will last for 12 months, it can also be renewed. Registration costs £13.80 per year.

If your identify is stolen it is unlikely that other members of your family will be affected, although it is possible, if for example your bank account is in joint names. CIFAS Protective Registration can be set up to cover all those who live at your address, and this will minimise the chance of their information being misused.

If you are worried that someone has already tried to get credit in your name without you knowing you can check your own personal credit file to see if any loan applications have been made in your name. Any one of the three UK credit reference agencies will be able to give you this information, on payment of a small fee (normally £2). If there are any entries on your credit file that you do not recognise, then you will need to discuss this with the relevant financial services institution.

What else can you do to protect yourself? One simple, but important step is to make sure you check bank and credit card statements carefully when they arrive, and query any transactions you do not recognise. Similarly, if you are expecting to receive mail from your bank and it does not arrive, contact your bank. They will be able to advise whether or not it is in your best interest to change your account number.

Contact details for the Credit Reference Agencies are as follows:

Additional information and other internet sites that allow you to purchase your personal credit reports and monitor credit file activity include: