Imagine that you’ve taught your child everything they need to know about personal finance. Then as he’s getting ready to head off to college and applies for financial aid, he’s unexpectedly rejected for financial aid due to poor credit. Yet he’s never applied for credit in his life. Sounds outrageous, doesn’t it? But this can happen to victims of child identity theft.
Most are aware that identity theft is a significant problem, and that it’s important to take measures to protect your identity. What people might not know is their children may also be targets of identity theft before they even become old enough to own a credit card. The Federal Trade Commission has identified child identity theft as a growing problem and encourages parents to do what they can to minimize the risks to their children.
How does it happen?
The most common way a criminal can steal or misuse the identity of a child is to get access to the child’s Social Security number. The perpetrator then uses the Social Security number to open credit card accounts or loans, rent an apartment, sign up for utilities like cell phone service, or even apply for a job. Credit issuers often don’t have a way to verify the age of the applicant, so if the criminal changes the age of the identity associated with your child, it’s possible that the issuer may approve them for credit, according to the Identity Theft Resource Center.
Once an account has been established in your child’s name, it’s easier for criminals to establish subsequent accounts until this fraud is discovered. If your child’s identity is stolen at an early age and the theft goes undiscovered until she reaches the age where she begins to establish her own credit, it can be very difficult to discover how the fraud first occurred.
How can you help prevent it?
Parents can take a number of steps to help prevent their children from becoming identity theft victims:
* Store your children’s Social Security cards in a safe place like a safety deposit box. Only give out your children’s Social Security number when it’s absolutely necessary, and provide alternate verification whenever possible.
* Teach your children to never reveal personal information to anyone, no matter how trustworthy that person may seem. People close to the family are often found to be perpetrators in child identity theft cases.
* If your child receives pre-approved credit card offers in the mail, you may want to check in with a credit reporting agency or Social Security. If you’ve been contacted by a collection agency regarding an account in your child’s name, there’s a possibility your child’s identity was stolen.
* Consider signing up your family members for a credit monitoring and identity protection solution such as the Equifax Complete(TM) Family Plan, which can help to protect two adults and up to four minor children. With this product, you will be notified of any changes or suspicious activity on your adult credit files; in addition, you can monitor your minor child’s identifying information for existence of an Equifax credit file and lock it, thereby preventing creditors from accessing this file while the child is enrolled in the plan.
By taking a few extra precautions to protect your children’s identities, you can help ensure they get off on the right foot as they become adults and begin establishing their own credit histories.
Courtesy of BPT