“Kids don’t get credit reports,” said Wayne “The Credit Guy” Sanford of New Start Financial Corporation. “But if somebody’s using their information to get approved for something, usually utilities like electric, gas, or cable, and then doesn’t pay the bill, that will reflect on the child’s credit.”
The moment there is an account opened in the child’s name, the credit bureaus create a credit report for them. They still wouldn’t have a credit score, though, Wayne said.
Why Would Your Child or Teen Have a Credit Report?
The Federal Trade Commission (FTC) recommends checking to see if your child has a credit report before they reach the age of 16. You might want to check even sooner, though. According to Chase Bank’s website, you can check to see if there is a credit file on a child (of at least 13 years of age) via AnnualCreditReport.com. Only a parent or legal guardian can check the credit history of a minor, according to the FTC website.
One red flag that your child may have a credit report is receiving credit card offers in their name. Collections calls or letters from the IRS may be another indication, according to a blog post at TakeChargeAmerica.org, a nonprofit financial education organization.
But a lot of times, fraud will go unnoticed until you check your child’s credit report.
Putting a Credit Freeze on Your Child’s Account
If someone has stolen your child’s identity and opened accounts in their name, the first step is to contact the companies holding the accounts, according to the FTC. Then, contact the three credit bureaus (Experian, Equifax, and TransUnion) and have them remove the accounts from your child’s credit report.
You can also contact the FTC to report identity theft, and contact your local police department for a police report, according to Equifax.com.
Finally, you want to put a credit freeze on your child’s credit account at all three credit bureaus.
How To Freeze Your Child’s Credit Report
You can freeze the credit report of a minor at all three credit bureaus by mailing in the appropriate forms and documentation to each bureau. It is free to do so.
You’ll need to provide information such as your own driver’s license or state ID, addresses for yourself and the child, the Social Security numbers — or copies of Social Security cards — for you and your child, and your child’s birth certificate or other documentation showing you have legal authority to act on their behalf.
“Now that you’ve got a security freeze, you can leave it on indefinitely and never worry about that becoming a problem for the kid,” Sanford said.
You can unfreeze their report as necessary, or they can unfreeze it to apply for credit when they reach the age of 18.
Using a Child’s Credit Report to Their Advantage
You don’t have to wait for someone to steal your child’s identity to put a freeze on your child’s account, Sanford added.
You can create a credit history for your child by adding them as an authorized user to your credit card.
“If you add them as an authorized user, and then wait two months or so, you can then request a credit report and be able to see their information,” he explained. “At that point you’re got the ability to see if there are any problems and report them right away.”
Sanford emphasized that adding a minor to your card as an authorized user does not make them responsible for your debt. “When you’re added as an authorized user, you’re not responsible for the card,” he said.
Of course, providing your child with a credit card they can use freely might be a risk you don’t want to take. You might want to hold onto the card for safekeeping, depending on how old your child is.
Additionally, if you ever run into problems with a high credit utilization ratio or late payments on the account — which could reflect on your child’s credit report and, also, on their credit score when they are 18 years old — you can simply remove the child from the account. “There’s no responsibility on the child,” Sanford said. “You can always remove them, thus taking away that negative information.”
Other Steps To Protect Your Child’s Identity
There’s one more step you can take to protect your child’s identity, Sanford explained. You can contact the IRS to get an Identity Protection Pin (IP PIN). An IP PIN prevents someone from filing a tax return using your Social Security number.
People sometimes steal children’s social security numbers to file a W-4 form for employment. Typically, this type of fraud is revealed when someone tries to cash their first paycheck, Sanford said. “It automatically will be identified.”
But, problems can ensue if it happens time and again because your child’s Social Security number was stolen and is now being used by multiple people. “The biggest problem is when it keeps compounding,” Sanford said.
You can also take other measures to protect your child’s identity, such as keeping their Social Security card safe under lock and key and refusing to provide their Social Security number as a form of identification (except when it’s really necessary).
If a school or healthcare organization asks for your child’s Social Security number, you can ask if another identifier would be acceptable or if you can just use the last four digits of the number, according to the FTC website. If you must provide their SSN, according to the FTC, ask about the organization’s security measures.
Noting how rampant fraud is today, Sanford said, “You’ve got to protect the children. If you’ve got the IRS part covered and the credit reports frozen after creating that credit report by adding them as an authorized user, you’ve pretty much got the best of both worlds. Other than some sort of medical fraud, you’ve got their identity locked down.”
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