Credit reports have become an important tool in American society. Good credit can be needed to get a loan, to get a job, and even to rent an apartment. What happens when a young person, looking for their first loan or apartment, finds that they already have terrible credit? Identity theft.
6% of all identity theft victims are under age 20, according to a report(PDF) by the Federal Trade Commission. In 2013, this amounted to almost 12,000 cases – and that number only includes the people who shared their age when they reported a problem.
Congress actually passed legislation in 2011 requiring child welfare agencies to check credit reports of youth in foster care when they are 16 years old, because foster youth are a prime target for identity theft. However, this problem is not limited to youth in foster care – all youth identities are tempting to fraudsters, because they have a clean slate and personal information is often made available by kids when they use the internet.
Youth identity theft can be devastating, preventing a young adult from getting a school loan, apartment, and car loan. However, it can also be easier to correct than later-life identity theft, because clear evidence can show that the entries are impossible when they belong to a minor.
What can you do to protect the identity and credit reports of the children in your life?
- Order a credit report for each of your children before they are 18. You can order this for free at annualcreditreport.com. Be sure to get one from each of the three major credit reporting agencies (Equifax, Experian, and Trans Union) – all are available at this site. Why check BEFORE your child is 18? It’s easy to prove a credit entry is impossible if the consumer is not an adult. Once they are 18, it is still possible to correct errors, but it takes more effort.
- Educate the children in your life about…
- Safety online and outside of home – never share personal information (address, birthday, etc)
- How to manage money (so they can establish good credit when they are ready). Need help with this one? Try 4-H Build a Million club online – it gives you tools and resources to help the youth you know budget, save money, and build financial savvy.
- The importance of establishing a positive credit history and preventing negative entries.
What can you do to clean up credit if a report exists for your child?
- Contact the credit reporting company and report the error. You will find contact directions on every credit report. A certified copy of your child’s birth certificate may be required to prove the error. Credit reporting companies are required to investigate your complaint within 30 days and to send you a free copy of the new report if a change was warranted. You can find additional information from the FTC here.
Identity theft is never fun. It’s worth taking the time today to educate the children in your life and to make sure they are able to start their adult lives with a clean slate.
