This is a guest post by Prosper member poppadollars.

A lot has been written about identity theft the last few years. Many people are concerned, and rightly so, that someone will hijack their good name and credit and abuse it. Typically, someone will discover the problem after some time has elapsed and problems have mounted to the point their credit has been seriously impaired. Maybe they apply for a loan and are rejected when normally they would have been approved. Maybe a collection agency contacts them about a delinquent account they never heard of.

Maybe a credit card statement they have routinely received fails to show up in the mail.

After further investigation they may discover loans and credit cards obtained in their name they never applied for or had thrown in the trash. In some cases it may appear that someone has created a whole new life at another address based on their name and credit history.

How can you discourage identity theft?

1. Check your credit reports from all three reporting agencies at least once a year (it is free). Follow up on any suspicious activity or accounts you do not recognize.
2. Reconcile your bank and credit card statements each month and follow up on any unusual transactions.
3. If your mailbox is accessible from the street, rent a PO box and have your bills sent to the PO box (or pay them on-line). This will avoid the bulk of the offers that come to a box on the street where anyone can easily divert them to their own use.
4. Buy a shredder and shred anything that has your name and account information on it instead of discarding mail in the trash. It is too easy for someone to dumpster dive and pull your financial information.
5. When using your credit card only deal with reputable merchants. Use third party payment options like eBay’s “Paypal” service or a service from your credit card company to pay for items on-line without disclosing your account information to the vendor.
6. Never give out personal or financial information over the phone or on-line to someone who has cold called you. Ask for a name and phone number. If they claim to be from someone you normally deal with, obtain the phone number independently through the phone book or other means to make sure you are calling who you think you are calling. Do not click on the links sent in e-mails to access contact web sites. It is very easy to create a web site that looks authentic, but is not the company you think you are dealing with.
7. When you mail checks to pay bills, place the envelope in the post office or a collection box, not a mail box accessible easily from the street by anyone in a vehicle. Checks can easily be altered.

Sometimes we joke that the best identity theft protection is to run all your credit cards to the limit and borrow as much as your are able. That way your identity is not worth stealing, but a better solution is to be vigilant and take some routine steps to make yourself less accessible a target.

Guest Post from Living off Dividends (aka on Prosper WealthBuildingLessons). 

I have a blog called living off dividends where I discuss, among other things, my passion for investing and generating income that can be used to replace one’s salary. I have numerous different types of investments like rental properties, stocks, canadian income funds, CDs, foreign currency ETFs as well as owning loans on Prosper.com.

Since a lot of my net worth is in illiquid investments like real estate, the rest of my investing has to be relatively liquid. This means that it shouldn’t be locked up for 10-15 years or more and it should be relatively easy to invest in.

Building a portfolio of loans on Prosper.com is easy and while it does tie up the money for 3 years, the returns are almost three times larger than on a 3 year CD.

Bidding on loans on Prosper.com is a form of asset allocation. You can’t always predict which asset class will do well so you spread your investments over various classes as a way of lowering your risk and boosting your yield.

While bidding on loans on Prosper.com is not without risk, my overall experience (and investment returns) have been quite positive. I’ve been investing for nearly 18 months and I’m receiving over 13% annualized returns. That sure beats any 3 year CDs on the market! I love investments where I can get 5% more than I get in a savings account, and without too much risk.

As an investing buff, I’m also a big fan of compound interest. I think it was Albert Einstein who said that one of the greatest mathematical discoveries was compound interest. One of the greatest proponents of this belief are the credit card companies. They charge you 20%+ interest on your balance, but you don’t usually have to pay more than a fourth of the interest accrued every month. This results in you having to pay interest on the accrued interest from the very next month.

I like my investments to have the potential for compounded returns. The interest on your savings automatically gets compounded. But most people stop there. They don’t try to compound the returns of their other investments. By re-investing a stock dividend back into the stock, you can essentially compound your stock returns too. Even Prosper loans have the potential for compounded returns by re-bidding the interest payments back into more loans.

So far, I’m quite happy with lending on Prosper.com. It fulfills most of my investment criteria and at tax time they even streamline your accounting by providing you with a statement detailing your interest income and expenses. If you haven’t already given it a shot, now’s a great time to do so.

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Nirav is the author of Living Off Dividends, a blog about investing. He’s currently lives in San Diego, California but has lived in England and India. He is an active lender on Prosper.

The following is a guest post by Prosper Lender Steven Grimes.

I’ve been bidding out money as a lender on Prosper for awhile now, and I find it a great hobby. Some people like skiing, some people like remote control airplanes, I like making money!

I own rental property and it’s a little worrisome at times to say the least. To date, Prosper has not called me to fix a leaky pipe or a broken door or a stopped up toilet. Prosper works!

I was skeptical at first, but over time I have grown to trust my instincts in picking out people to commit my money to. It’s pretty easy with all the info Prosper gives you.

I’ve gotten three friends to join and now it gives us more to talk about. Of course they were skeptical in the beginning, but as I kept showing them my stats, I won them over. I don’t easily recommend anything, especially when it comes to money, but this works.

I’ve turned several small fortunes into smaller ones through stocks and mutual funds before, and it looks impossible to take that kind of a beating on Prosper. Go conservative, make 8%, go aggressive and hang on for more profit. It’s a way for the little guy to take a piece away from the big guys. I bet banks are shivering at the growth and potential of this direct lending site.

I do feel like I’m helping people and I’m having fun and creating an income string for my future at the same time!

2 Guest Posts Today From Prosper Members.

Lending on Prosper is Exciting!

by vegetable_lasagna

Sure I could invest money in CD’s, mutual funds, bonds etc. But how boring is that?!?! With Prosper, I feel like I am running my own business - the bank of ME. Except, I don’t have to deal with hiring any employees, answering the phones, or doing much work.

I wake up each morning excited to see if my bids were accepted, or if that borrower who is 2 months late on his/her payment has finally caught up. I like finding money available to lend in my balance statement, so that i can find yet another loan to fund.

The educational value of Prosper is also great. I am learning a lot about my own credit and what it means to me in my life. Since I am studying loan applications all the time and creating my own ranking system, I now know what I must do to make sure I would lend to myself (which I totally would).

If I were you, I would join Prosper in a heartbeat. I tell all my friends and family about it and hopefully they will someday take my advice.

Bid or Not to Bid

by Nokmbk

Bid or not to bid? Biding low just to beat out the another lender on a $50 dollar bid? Sure why not reduce your rate of interest and diminish your average rate of return while increasing your risk. One could say it’s better for the consumer (which is true), but we are all here to prosper. It is funny to see so many lenders out bid each other for 0.01%. Granted the borrowers that write a better ads will attract lenders, but the art is looking beneath the ads. What do people really need the loan for? Are the reasons to borrower founded? Do they have a business plan or a way to stay out of debt??? The people who don’t offer a high enough rate will not be funded; they will learn; and re-list to attracted new lenders with an appetite for the higher risks that their stories with holes present.

So when bidding make sure you bid in small increments because your money is at risk once the loan is funded!!!

Good luck

Guest post by Brett of Personal Loan Portfolio. 

Although the tax rebate is not yet finalized, many people are already mentally spending the money. Most people only consider the options: save or spend. I have noticed many finance bloggers already announcing their plans to save the rebate. Other people feel it is a patriotic duty to spend it. I believe that the choice is personal, but I have an idea to help resolve this dilemma.

Paying off high interest debt or saving an emergency fund should be your first choice of uses for the money. But if you do not need the money for those purposes, should you invest or spend the money? When congress passes a rebate, they hope that Americans will spend the money to lift the economy. However, the majority of Americans saved, invested, or paid off debt with their 2001 tax rebate. According to one study, only 22% of people said that they spent the money.

Investing in stocks (with the exception of a public offering) does not help a business grow. Investing in the stock market only passes money between investors. There is an alternative to investing in stocks that will allow you to invest your rebate and stimulate the economy - Prosper loans. With a Prosper loan, you can put your rebate in the hands of people who will spend the money stimulating the economy. Dilemma resolved. You can earn a reasonable return on your investment and do your part to help the economy with your tax rebate.

As you search for Prosper loans, limit an advanced loan search to borrowers who need the money for Small Business or Home Improvements. Personal loans and Other loans may also be good categories but you must read the descriptions to ensure that the borrower is planning to spend the money. Funding a vacation, a kitchen remodel, or a wedding are just a few of the opportunities regularly available for lending on Prosper where the money will be used to help the economy.

Investing your tax rebate on other people’s spending using Prosper loans eliminates the false choice of spend versus save. When someone asks if you are spending or saving your tax rebate, you can honestly answer “Both!”

Brett is a relatively new Prosper lender who writes about his lending experiences on the blog Personal Loan Portfolio.