Should You Freeze Your Child’s Credit File?

How Child Identity Theft Happens

Identity theft typically happens when a person uses someone else's name, Social Security number (SSN) or other personal information to commit fraud. When a child is the victim, it is usually related to their SSN. Often the theft remains undetected for years, only to be unearthed when they grow up and check their reports or start applying for credit.

"Child identity theft is usually a form of synthetic identity theft, which is when a thief uses a combination of true and fictional credentials to start and use accounts," says Eva Velasquez, president and CEO of the Identity Theft Resource Center. With your child's real SSN, the thief creates a fake identity, which is often used to open new credit cards or loans. The thief will rack up debt and not pay, which is then recorded on the reports associated with the SSN—your child's.

According to Velasquez, there are a couple ways thieves might overtake your child's SSN. Some invent the numbers, and when the Social Security Administration issues the same one to your child at birth, the number is already tainted. Another method is when someone you know has or had access to it; it could be another parent (usually in a divorce situation), a relative or family friend.

Children in the foster care system are especially vulnerable to identity theft. "It's rather common for these kids to be passed around from one person to the next," says Velasquez. "Their odds of being an identity theft victim are much higher than the general population."

Freeze Your Child's Credit

One of the most effective ways to help protect against a thief from opening credit cards and loans in a child's name is to freeze his or her credit file. The major credit reporting agencies (Experian, TransUnion and Equifax) offer this tool. When it's in effect, a lender can't check that credit file, so they wouldn't be able to issue a credit card or loan in your child's name.

You can freeze a credit report for a minor in your care as long as they're age 15 or younger. Once a child turns 16, they'll be able to manage the freeze on their own. A credit freeze can take up to five business days after the request is received to go into effect. To thaw a credit freeze, you'll have to use a password-protected account or a PIN (personal identification number).

To freeze a child's credit report through Experian, you'll need to submit a freeze request by mail. This request will need to include copies of various identification forms, including the child's birth certificate and Social Security card, as well as identification forms and proof of guardianship belonging to the adult requesting the freeze.

Talk to Your Child About Credit Reports

Discussing identity theft and credit reports with your child is important. "It's part of good identity hygiene," says Velasquez. "You have to educate your kids early."

Here are some ways to get started:

• Review what credit and reports are, and why you want your child's identity to be protected against thieves.
• Warn your child against sharing or exposing personal identification data, and encourage them to inform you if they suspect a problem.
• If you've frozen your child's credit reports, explain why you did so and what it means.
• When your child is nearing 16 years old, prepare them to assume control. Show how to thaw the file.
• Teach wise credit monitoring habits and identity theft protection techniques.

Finally, it's always a good idea to consider all potential problems that could arise when you've frozen a credit report. You don't want to limit access when your child needs it, so if he or she is too young to have autonomy, keep a record of passwords and PINs for your chosen custodian to provide in the event you are not there to provide them. With this kind of preparation, you can be sure you've done everything possible to safeguard your child against a myriad of dangers.