Your little bundle of joy could start life off deeply in debt and you might not even know it.
Some lenders require a social security number with a clean credit history, but don’t necessarily check that the borrower’s name matches the number, so thieves can get away with using social security numbers that aren’t assigned to anyone at all.
Your child’s identity can be at risk at any point in life. Children are easy targets because of their clean credit. So how can you protect Junior from a bruised credit history before he or she is even old enough to say “credit card”?
Here are a few steps you can take, at every age, to ensure your child starts off adulthood with a clean slate.
Birth-Preschool
Start with keeping your child’s documentation safe. Don’t carry around your child’s identifying documents, like a birth certificate or social security card. Establish good filing habits and store your child’s important documents in a fire-proof, locked safe or box. Be cautious when you offer your child’s social security number or identifying details. Always ask why the information is needed before you give it out. And, of course, make sure your family computer is up-to-date with the latest virus protection software. Entering sensitive information online without taking the proper precautions could leave your child’s details in danger of being captured by a thief.
Before your child is old enough to start using credit, he or she shouldn’t have a credit history at all. any sign of a credit history could mean fraud. If you want to ensure that your child’s credit history is non-existent before the age of 14, you have to go directly to the credit bureaus. Fill out the Child Identity Theft Inquiry Form with TransUnion, which will tell you whether or not your child has a credit report. If the answer is yes, your child could be an identity theft victim and you should contact the other two bureaus.
Middle School
When your child turns 14, you’ll be able to request a credit report from each of the credit bureaus through AnnualCreditReport.com, but only if one is available. At this age, there should be no credit history at all, so if it turns out one exists, it’s a red flag for identity theft.
To give you time to dispute any fraudulent accounts with the credit bureaus, and to protect your child’s credit from being accessed again, put a credit freeze on the report. Guidelines for credit freezes vary by state, so check ConsumersUnion to find out how to initiate one in your state of residence. You’ll have plenty of time to clean up the credit report and dispute inaccurate items before he or she is old enough to start building a real credit history.
High School
Your teen will likely get a first job in high school. Teach your child how to protect financial information, not to carry certain pieces of information like ocial security card, internet passwords, passport or account PINs in a wallet or purse. Caution against giving out personally identifying information without first asking what the information will be used for. And encourage a credit report check once a year.
After turning 18, you can help your young adult set up an account with Credit Karma, including free credit monitoring. This way your child will be notified if anything important changes, like an unauthorized account, so your family can react quickly to any suspicious signs of fraud. Teach responsibly building credit, perhaps with a student credit card, when the time is right..
Bottom Line: In adult life, your child’s credit will be not be your responsibility. But you can help ensure your little one starts off adulthood with a clean credit history.