Finance / Home & Family

Protecting a Child’s Credit Future

credit-reportIt’s hard to believe it, but identity theft can happen to children. And, many times, their parents are totally unaware – especially since children under age 18 generally don’t have credit reports. Identity risks can occur if someone mistakenly or unscrupulously uses a child’s Social Security number. In many cases, the number may be obtained and used for fraudulent purposes. Sometimes use can go on for many years, until finally detected. A dishonest person may apply for credit and take out loans in the child’s name. This can harm the child’s credit. Not only can it be a shocking discovery, but it can ruin their financial status at a time when they may seek to apply for a credit card, buy a car, or rent an apartment. Thieves can also file false tax returns or claim children who are not theirs on a tax return to dishonestly obtain credits. Thus, children need their credit protected. And it’s up to adults to keep watch on their behalf.

Equifax recommends six basic steps that adults can take to help keep their children’s personal information safe. Here’s a quick run-down:

1. Safeguard your child’s important personal information by keeping documents in a safe place. This includes their Social Security card, birth certificate, medical insurance card, legal documents, and their passport.

2. Avoid sharing your child’s personal information, such as social security number, unless absolutely required. If asked by doctor, see if you can provide only the last four digits. Ask how it will be protected.

3. Educate your child about online behavior and talk to them about privacy and security. Explain how important it is to protect personal information.

4. Check to see if your child has a credit report. If they do, it may indicate identity theft. If a credit report is found, inform the credit bureau it may be fraudulent.

5. A credit report can be created for a child who is under age 16 by a parent or legal guardian, and then the account can be frozen. This can restrict other people’s access to your child’s credit reports. The security freezes must be placed separately with each of the three nationwide credit bureaus. The three federal credit bureaus responsible for consumer reporting in the United States are Experian, Equifax, and TransUnion.

6. Consider credit monitoring products designed to watch over credit report activity.

If you suspect that your child is a victim of identity theft, it is important to act. Contact the Federal Trade Commission (FTC) and the three credit bureaus to report the issue and begin recovery. Promptly file a police report to document the theft. Also contact the fraud departments for the companies where accounts were opened. Tax related issues must be reported to the IRS. Even if one is uncertain of any tax related incidents, parents may submit Form 14039 called the Identity Theft Affidavit. This form notifies the IRS that a person, in this case their child, is the subject of identity theft. The IRS will set up an ID protection pin for use in the future to file tax returns.

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