Imagine finding out that your eight year-old has a house in foreclosure thousands of miles away. How about getting collection calls because your young teen is several payments behind on a car loan? These are not far-fetched scenarios. Over 10% of U.S. children have had their Social Security number used fraudulently.
Kids have pristine records with no real credit score of their own. Parents generally don’t think to monitor the status of their kids’ identity. This is the perfect combination for children to be the easy targets of identity theft.
A child’s Social Security number can be used by identity thieves in the same ways as our own numbers can be used – to apply for government benefits, to open bank accounts, to obtain credit cards, to apply for loans and to secure a rental lease.
The government has taken steps to protect your child. The Credit Card Accountability Responsibility and Disclosure Act of 2009 set the minimum age for having a credit card at twenty-one. A student can get a card at eighteen with the co-signature of a parent and proof of ability to pay for charges. The companies were also forced to stop practices to entice students on college campuses with offers of free gifts.
You Can Help Protect Your Child’s Identity and Credit Health
- School forms often require personal information. Ask how the information is collected, used, stored, and disposed of. This sensitive information is protected by law – make sure that they have a plan to safeguard the information.
- Watch for credit offers mailed in your child’s name as this can be an early warning to identity theft. If the offer is from a bank where there is an account in your child’s name, ask to be removed from marketing. If the offer comes from another source, check with the company to see how they acquired your child’s name.
- If you receive a bill, collection letter or phone call in your child’s name – there’s a problem. Don’t ignore these red flags, contact the creditor.
- Check to see if your child has a credit report. The reporting agencies generally don’t keep reports on minors – if there is a report, it is a good indicator that someone has been using your child’s identity. Teach your older teens to check their credit report annually. Have them do it on their birthday – this is an easy reminder, and consider keeping good credit as a birthday present to themselves.
- Teach your kids about credit cards and using credit wisely – start when they are very young and see you using your cards to pay for groceries or toys. Explain that credit cards are not magic and that you get a bill at the end of the month which has to be paid. Start your older kids off with a debit or prepaid card – think of these as credit cards with training wheels.
There are nearly nine million identity fraud victims every year in the United States with the total financial loss attributed to identity theft of over $13 billion. Be vigilant and protect yourself and your children. Credit problems can have far-reaching effects on your child’s future, including employment, college acceptance, tuition loans and even home ownership.