How to Make Sure Your Child Has a Clean Credit History

By Aaron Crowe

Identity theft just doesn’t happen to adults. It can happen to children too, even babies, for a simple reason: Thieves can use it to apply for government benefits, open bank and credit card accounts, and apply for a loan.

All it takes is getting a child’s Social Security number. With no credit history, children can be easy targets for identity theft and their Social Security numbers can be more valuable than an adult’s.

If a thief does use a child’s information to open a credit card account, for example, it could lead to a poor credit history before they reach age 18. That could hurt their credit score and make getting good terms on credit, a mortgage and insurance difficult. Some employers and landlords also pull credit reports to predict what type of risk someone might be in the future.

Here are some ways to ensure your child has a clean credit history into adulthood:

Keep documents safe

Don’t carry around your child’s birth certificate or Social Security card. Keep them locked in a fire-proof safe at home. Have your home computer updated with virus protection software.

Also be cautious about who you give your child’s identifying details to. Ask why the information is needed before giving it out. Ask if you can use a different identifier, or use the last four digits of your child’s Social Security number.

School forms sometimes require personal and sensitive information. Ask school officials how your child’s information is collected, used, stored and thrown away.

Your child’s information could also be affected by a security breach at your doctor’s office, for example, or a thief may break into your home. Family members may use your child’s identity to start over.

Look for warning signs

Several signs can be a tipoff that someone is using your child’s information to commit fraud. Here are some signs of identity theft that the Federal Trade Commission recommends looking out for:

• You or your child being turned down for government benefits because the benefits are being paid to another account with your child’s Social Security number.
• Getting an IRS notice that the child didn’t pay income taxes, or that their Social Security number was used on another tax return.
• Collection calls or bills for products or services you didn’t receive.

Check if your child has a credit report

Your child shouldn’t have a credit history at all before age 14, so any sign of credit history could mean fraud.

Before your child is 14, check with the three main nationwide credit reporting companies for a free report. You can also start at annualcreditreport.com for a free report every 12 months.

Hopefully, your child won’t have a credit report. Filling out the child identity theft inquiry form with TransUnion, one of the main credit bureaus, will tell you if your child has a credit report.

Repair the credit report

If the reply is that your child does have a credit report, then contact the other two credit bureaus for free credit reports so you can fix any errors.

If your child’s information is being misused, ask each credit reporting company to remove all accounts, account inquiries and collection notices from any file associated with your child’s name and Social Security number, the FTC recommends.

Also contact every business where your child’s information was misused. Ask each business to close the fraudulent account and flat it to show it came from identity theft.

Ask each credit company to put a fraud alert on your child’s credit report. You may also want to ask for a credit freeze, which may require providing proof of the child’s and parent’s identity to the credit reporting companies.

You can also file a fraud report with the FTC online or by calling 977-438-4338.

Add a teen as an authorized user — maybe

A credit card account can’t be opened for a young child, such as age 5-10, as a way to build their credit history early and protect their identity. It could open the door to identity theft, and creating a credit file could give a family member or stranger a chance to steal the child’s credit identity.

Adding a young child to a parent’s credit card account as an authorized user is also a bad idea. A clean credit history — meaning no use of credit at all — is best for a child when they do get a credit card someday.

What you may want to do — if you’re comfortable with it — is add your child at age 15 or so as an authorized user to your credit card. This can boost their credit score if you have a good credit record.

Make sure they understand how a credit card works and keep tabs on their charging activity. You can also add them as a user but not allow them to use the card, or to only use it when you’re shopping with them.

Teach your teen

When your teenager gets to high school, they may want to get a part-time job. Teach them how to protect their financial information.

This should start with not giving out personal identifying information without first asking what the information will be use for.

They shouldn’t carry their Social Security card, internet passwords, passport or account PINs with them in a wallet or purse. Help them check their credit report once a year.

Once they’re 18, their credit will be their responsibility. Helping them start adulthood with a clean credit history can be one of the best gifts a parent can offer.