It’s an unfortunate sign of the times, but parents today have to be extra vigilant in protecting their children from many harmful things. That means constantly checking their social media, phone texts, and credit reports for nefarious actors and activities. That’s right – credit reports.
In the practical sense, no child under age 18 should have a credit report because they are too young to establish credit. However, if you do find a credit report in your child’s name, it’s likely because he or she is a victim of identity theft.
Children are Targeted by Identity Thieves
Children are prime targets for identity theft because they have fresh Social Security numbers which have not been used to establish any accounts or credit. Identity thieves have used stolen Social Security numbers to open fake credit card accounts, apply for mortgages, and obtain government benefits. One in 40 households with minor children have at least one child whose identity was stolen to establish fake accounts.
In most cases the family or the victim won’t discover the fraud for many years, and by then, it becomes extremely difficult to clean up the mess. Imagine your child, now 30 years old, applying for a car loan only to find out that they have a foreclosure on their credit report. The sooner you learn of the fraud, the easier it is to reverse the damage and stop it from occurring again. You don’t want to wait until letters from collections agencies start showing up in your 15-year old child’s name.
One of the only circumstances in which a child might have a valid credit report is if the parent added the child as an authorized user on a credit card.
Check for Child’s Credit Report Early and Often
Parents should start checking to see if their children have a credit report in their name at least by the time they are 16. If you do find an incidence of fraud, you will have time to correct it before your child applies for a job, a credit card, financial aid, or needs to rent an apartment.
As a parent you are legally entitled to receive a free annual credit report from each of the three credit bureaus – TransUnion, Equifax and Experian. Technically, minors aged 14 or older may request their own reports, but you shouldn’t leave it up to your child to get this done. If the child is over 18, they must request their own reports, so it would be important to encourage them to do so and help them through the process the first time.
The three credit bureaus all provide instructions on how parents can request reports for their minor children. You should start online to learn about each reporting agency’s process, but you may be required to mail in the request along with documentation. The process may vary a little between the three, but they all ask for the same information:
- Child’s legal name
- Date of birth
- Copy of the child’s birth certification and Social Security card
The parent also needs to provide a driver’s license or some other government-issued identification along with proof of address (such as a utility bill). If the parents are divorced, proof of legal custody also has to be provided.
You should get in the habit of checking credit reports at least once a year, preferably twice a year. Identity thieves are relentless in their pursuit of new identities to compromise and it can happen any time.
What to Do if a Credit File is Found
If the credit bureau finds that a credit file exists in the child’s name, it will notify you and take steps to flag the file to prevent any further activities. You can request that the credit bureaus freeze the file and they will do so at no cost (TransUnion may not freeze the file if you live in a state that does not explicitly allow it). The credit bureaus will also take steps to help you reverse the damage.
If you find instances of identity fraud from one of the credit bureaus, you should contact the other two and request that the file be frozen. You should then file a police report as well as a complaint with the Consumer Financial Protection Bureau.
Just because you found a credit file and managed to clean it up, doesn’t mean it can’t happen again. Make a practice of checking at least once per year.