Unfortunately, Windows Phone 7 doesn’t provide entire device encryption like Blackberry and Apple iOS. This means it’s possible for a hacker to access your phone’s data without the password or PIN. Keeping that in mind, users shouldn’t store sensitive info on Windows Phone 7 without using a third-party encryption app.
Secrets (free) and MyVault ($0.99) are third-party encryption apps you might consider using. Both allow you to store account info, credit card details, and other information. All text notes stored by the apps are encrypted and secured by a password, buffering your sensitive data from computer-savvy wrongdoers.
Since Windows Phone 7 doesn’t support normal removable storage, such as SD cards, you don’t have to worry about someone quickly ejecting your SD card and taking your data. The flip-side of this security advantage is you don’t have the convenience of removable storage. Some phone manufacturers may integrate an SD card under the battery cover to increase storage, but if that's the case, Windows Phone 7 will encrypt it.
Instead of storing documents on the phone, you could consider using a secure storage service (more on that later).
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