Although there are many ways to obtain other people’s identities and defraud victims, there are typically two main categories of identity theft.

First, there is an account takeover. This type of identity theft is typically the easiest for thieves. In general, a thief will obtain your credit card information (or other comparable financial information) and use it to make purchases. This method is very lucrative for the thief as they can generally quickly reach the credit card’s limit and discard the information before you’re even aware a theft has happened. Victims typically learn about the fraudulent purchases when they get their monthly statement or when their card is declined because it has reached the maximum allowable limit.

The second type of identity theft is application fraud (also known as “true name fraud”). To do this, a thief must have access to a great deal of personal information about a victim. The thief will then fraudulently use this information to apply for lines of credit in someone else’s name. Victims may not learn of this activity until they’re contacted by a collections agency for payment, see a surprising new lien on their credit report, or are denied a line of credit due to the fraudulent activity.

Both of these types of identity theft activity are devastating to you and your finances. Even though you can seek redress and may be reimbursed in full for any money that was stolen from you, the hassle and stress of dealing with it all is a situation to avoid.