"Hacker" is not an accurate term for the person who breaks into your computer. Hackers modify things to make them work better. The term "malicious hacker" describes someone who breaks into computer systems. When a malicious hacker obtains access to your computer, many things are at risk. While most people are concerned about a hacker seeing financial information, the door is open to much more.

The basics

Malicious hackers can see any data you have saved. They can access pictures, documents, emails, tax forms and anything else that you have saved on your computer.

Under the surface

An attacker can set up keystroke loggers and packet sniffers to steal information. They can view what banking website you use, what the user name is, and the password. They can do this with any website you visit.

Deleted files

Even those old tax forms that you deleted aren't safe. Using programs that can be downloaded, malicious hackers can recover just about any file that you think you have deleted from your computer.

Passive information

By studying the information on your computer, malicious hackers can piece together details about your life. They can find out where you vacationed, the names of your relatives, and what your hobbies are.

Prevention/solution

Using data deletion software and antivirus software suites are the first step in preventing access to your computer. Frequently changing your passwords also goes a long way in preventing a malicious hacker from maintaining access to your computer. Finally, encrypting sensitive data helps protect it from prying eyes.

Source:

Duke University: IT Security Office

Resource:

Eraser software

TrueCrypt