Since January 1, 2016, parents have the ability to place a security freeze on their child’s credit report. A security or credit freeze is one of the best ways a parent can insure that criminals or other family members will not be able to use or establish credit in any child’s name under the age of 16.
Children’s credit is especially alluring to unscrupulous individuals because it is a clean slate. Stealing a child’s identity is easier than you think. All a criminal would need is the child’s social security number and they can falsify any other needed information.
Where would they get access to this information? A criminal can purchase a stolen social number on the dark web for as little as $2. But one of the most common ways they gain access is through school related activities. Registering for school, summer camps, insurance forms and other activities provides criminals with access to a wealth of information. Even the IRS was recently hacked and millions of social security numbers were stolen from tax returns, including children’s social security numbers.
What can they do with the stolen social security numbers? The thief will set up a ‘synthetic identity’ then go on to establish credit cards, set up utility services, rent a house or apartment or any number of credit dependent activities. The theft is usually not discovered until the child is older and trying to apply for credit themselves, or a parent happens to run a credit report or a bill comes in the mail in the child’s name. The youngest reported identity theft victim was one month old!
What can you do to protect your child’s future credit?
1. Take advantage of getting a free report from each of the 3 credit bureaus yearly. To get the max value out of this benefit, space out the requests. For example, in January, request a report from Equifax, then maybe in May request one from Experian, and finally in September get one from Transunion. This is a prudent practice to do yearly with your own credit reports as well!
2. Contact each of the credit bureaus, either online or by mail and request that a freeze be placed on your child’s credit file. Please be aware that it may cost up to $5 per bureau to get the freeze in place, but it is well worth the money.
3. When setting up the freeze, establish a PIN or password that is known only to you and your spouse. By doing this step, it will trigger an alert whenever someone tries to access their file or establish credit in their name. The inquiring entity will be denied and advised that the file is frozen. When your child is older and ready to establish credit, you can lift the freeze via the password or PIN, so do not forget or lose the information. Put a copy of this info and the date established in a safe place.
These methods may not be 100% fool-proof, (especially if a family member is involved), but it can make it harder for someone to ruin your child’s credit before they get to adulthood.