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Identity Catch-22: Children and Credit Reports

November 24, 2016

There are so many rites of passage into adult life: learning to drive, graduating from high school, maybe college, your first job. Then there are the financial rites of passage: setting up your own bank account, renting an apartment, your first credit card. Sadly, identity theft can rob your child of these important milestones. If someone is using your child’s identity, your youngster could be rejected for student loans, jobs, housing, a driver’s license, and more, so you want to address the problem well before they take those first steps into adult life.

One of the best ways for adults to discover and stop identity theft is to regularly check their credit reports. The Catch-22 for kids is that, unless a parent has made them an authorized user on a credit card, they shouldn’t have credit reports at all until they are 18. According to the government’s Consumer Financial Protection Bureau (CFPB), the only other reasons a child would have a credit report are through a clerical error involving another consumer with the same name or because someone has stolen the child’s identity.

The CFPB recommends requesting your child’s credit report when they turn 16 and every 6–12 months thereafter. If all is well, the credit bureaus will tell you that your child has no credit report. If there is one, you need to find out why and, if there’s any indication of identity theft, put a freeze on the child’s credit until their identity is recovered and they are older.

However, if you see any warning signs of identity theft, don’t wait until age 16 to check your child’s credit. Warning signs include receiving bills, credit card offers, calls from collection agencies in your child’s name, having a bank account application denied because of poor credit history, or being denied a driver’s license because someone else already has a driver’s license in their name.

If you find that your child’s credit has been stolen, you can download an excellent tip sheet from the CFPB on how to protect or correct your child’s credit. One other word of warning: if you find a problem and freeze your child’s credit report, you will be issued a password to manage it. In some cases, hackers have actually stolen those passwords using email or online phishing or spyware on the parent’s computer, and then used the password to lock the parents out of the child’s credit report. To prevent this, consider using a password manager that issues a unique password for every login. And why not get your kid set up with a password manager at the same time? It’s one more step towards a safer, happier adulthood.

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