Identity theft is on the rise and as of 2014 was the number one consumer complaint lodged with the Federal Trade Commission. This form of fraud happens when a criminal steals your personal identifying information such as your name, address, birth date and social security number and uses it to steal money from you, opens up accounts in your name and even creates birth certificates and driver's licenses using your information. Identity thieves also steal tax returns and file for false refunds in your name. (See also: How To Safeguard Your Tax Returns From Identity Theft and Identity Theft: How To Avoid It.)

Identity theft can happen in seconds, but untangling the mess scam artists create can take months and even years. The magnitude of the crime will dictate how tough it is going to be to rectify it. Not to mention that it can be costly if you need to get lawyers involved and all the while your credit is getting hammered.

Consumers have numerous ways to protect themselves from identity theft, such as not giving out their Social Security numbers, encrypting their personal data and shredding important documents before tossing them in the trash. But even with all the precautions in the world, you can still fall victim to this serious crime. Consumers who were part of another data breach are at increased risk of getting their identities stolen because their personal information is already out there.

One of the easiest ways to spot identity theft is to stay on top of your credit cards and your credit report. See anything amiss, and chances are you have been compromised. As soon as you learn your identity has been stolen, either through monitoring your credit or because you were part of a store or company breach, the first thing you want to do is place a fraud alert on your credit report. While there are three national credit reporting agencies: TransUnion, Experian and Equifax, you need to contact only one to request the fraud alert. Whichever agency you contact is required to alert the other two agencies to place fraud alerts on their credit reports. A fraud alert makes it harder for identity thieves to open up accounts in your name, because a business must verify your information before issuing credit and as a result may try to contact you. If there isn't a fraud alert on your account, anyone with Internet access and all your identifying information can open up lines of credit pretty easily. Keep in mind that the fraud alert stays on your credit report only for 90 days. If you still are concerned, you can extend the fraud alert on your credit reports for a longer period of time.

Once you request your fraud alert, you are entitled to a free credit report from all three agencies. With that in hand, it's time to pour over the reports and see what damage has been done. Be on the lookout for accounts that you never opened, debts that aren't recognizable and credit inquiries from companies you never applied for credit with. It's very important to not skip any of these steps. A thorough understanding of the scope of the problem is essential.

After you have complied a list of all the fraudulent activity on your credit report, you must contact all of the agencies and dispute the charges. It's a good idea to put your dispute in writing when requesting that it be addressed. It may be even worthwhile to send it certified mail so you can ensure that the agencies received your written disputes. Following up a few days later is also prudent. It is a good idea as well to either cancel all the credit cards that have been compromised or request that the card issuer give you a new number. For example, if an instance of identity theft racked up a thousand dollars on your MasterCard, you are going to want to cancel it or get a new number.

At the same time that you are canceling or reissuing your credit cards, you also need to report the identity theft to the Federal Trade Commission and with your local police department. Consumers can file an online compliant with the FTC at its website. While filing a complaint with the police department might not yield immediate substantial results, you do want as much documentation as possible to back up your allegations of fraud. Make sure to get a copy of the police report, and if they are reluctant to help, show them your FTC identity theft affidavit. Depending on the type of identity theft, you may have to contact other agencies like the Internal Revenue Service. Following a breach, you also want to stay on top of your credit report to spot any new instances of fraud. (See also: How Seniors Can Fight Identity Theft.)

Identity theft isn't going away, and untangling it can be time-consuming and costly. But ignoring the issue isn't an option if you want to keep your credit in good standing. Filing a complaint with the credit agencies, the FTC and local police, and being on the lookout for any inaccuracies in your credit report are some of the essential actions you need to take if you have fallen victim to identity theft.