There's an easy way to protect yourself from identity theft without spending time and money on costly credit-monitoring services: just freeze your credit file.
Credit-file freezing is relatively new. Two years ago only four states had laws allowing it; now 39 states and the District of Columbia do. When you freeze your file, nobody—not even you—can use it to open a new account. You can lift the freeze temporarily if you want to apply for a mortgage, car loan or new credit card yourself. "We recommend that everyone consider it," says Gail Hillebrand of Consumers Union. To freeze your file, you'll have to notify all three credit bureaus—Experian, Equifax and TransUnion. There will probably be a small fee, but the procedures are different in every state, so find your state at consumersunion.org/securityfreeze.htm and follow the steps outlined. The freeze won't change your credit score, but if you're about to enter a flurry of credit applications yourself, wait until your own borrowing has settled down before you place the freeze.
Don't expect complete protection. Thieves won't be able to use your identity to get new credit cards or loans, but they can still use the cards they lift out of your wallet and the account numbers they pull off discarded receipts. And the credit bureaus can still use your info for marketing purposes, so your weekly ration of credit-card offers won't diminish … lest you were worried about missing them.