Identity theft is a constant threat these days. With the number of major data breaches that have occurred in the past few years, such as the unprecedented Equifax breach in 2017, you’ve probably experienced some form of financial fraud by now.
You might keep a close eye on your own finances for just that reason, but there’s someone else who is especially susceptible to becoming an identity theft victim: your kid.
Fortunately, a new law went into effect on Sept. 21 that lets you freeze your credit ― a helpful preventative measure ― for free. Here’s how and why you should freeze your child’s credit, too.
Child Identity Theft Is A Growing Problem
A study by Javelin Strategy and Research found that more than 1 million children were victims of identity theft in 2017. Two-thirds of those victims were under the age of 8.
If they’re lucky, parents might receive a notice addressed to their child from a collection agency or the IRS to tip them off. Usually, though, it’s not until child victims are much older that the fraud is discovered. By that time, extensive damage has already been done.
“When you commit fraud on an adult, that adult is busy building their life ― buying a house, getting a car. Credit checks are more likely to occur and they’re more likely to discover the fraud,” said Jerry Linebaugh, founder of JLine Financial in Baton Rouge, Louisiana. “But in the case of a 2-year-old, they’re not going to check their credit for at least a dozen years. That’s a long time that [criminals] can go out there and not only use that fraudulent account, but sell the identity.”
By the time that child actually needs to access credit, whether it’s to receive some sort of federal benefit, rent their first apartment or take out a student loan, their credit has been wrecked.
Placing a freeze on your child’s credit file can prevent fraudsters who accessed their personal information from actually using it.
What Is A Credit Freeze?
When you freeze your credit, you restrict access to your credit reports. If anyone tries to apply for a credit card, take out a loan, rent an apartment, open a cell phone account or do anything else in your name that requires someone to pull your credit report, they’ll be unable to do so as long as the freeze in place. Then, when you do want to apply for credit, you have to “thaw” your credit file first.
In the past, instituting a credit freeze was a tedious and somewhat pricey process. It required you to contact each credit bureau individually, place a freeze on your file with that particular bureau and pay around $10, depending on where you lived. If you didn’t freeze your credit with all three major bureaus ― Experian, Equifax and TransUnion ― your personal information was still susceptible to fraud. If you wanted to unfreeze it, you’d have to go through that same process again. Then to re-freeze ... well, you get it.
However, once the Equifax data breach occurred, the process of freezing credit with the company went from a moderate inconvenience to total nightmare. Phone lines were jammed and the site kept crashing; people waited until the middle of the night to try and get through with still no success. In fact, following the breach, less than 1 percent of customers bothered to freeze their credit.
Fortunately, things have calmed down since then. And if there’s any silver lining to the whole situation, it’s that Congress responded by creating the Economic Growth, Regulatory Relief, and Consumer Protection Act, which now requires the credit bureaus to provide credit freezes for free. And they have to do it fast: Freezes are to be implemented by the next business day, and unfreezing (also free) should take no more than an hour. Parents can freeze the credit file of any minor under the age of 16; those age 16 and older are treated as adults and can freeze their own credit.
Credit Freeze vs. Credit Lock
Linebaugh noted that there’s an important distinction to make when it comes to credit freezes and similar-sounding credit “locks.”
Equifax began offering credit locks for free following the company’s data breach. It’s a service similar to that already offered by TransUnion (also free) and Experian (available as part of a credit monitoring bundle, the cheapest of which costs $9.99 a month).
A credit lock is similar to a credit freeze in many ways, but there are two key differences.
First, it’s much easier to unlock a credit report than it is to unfreeze it. Secondly, it absolves the credit bureau from any legal responsibility should the lock fail. That’s because federal law governs credit freezes, but not credit locks. So if there’s a problem ― the freeze wasn’t placed as requested, or your information is leaked ― you might have legal recourse. A credit lock, on the other hand, is a proprietary product and service agreements state there’s no guarantee the tool is foolproof.
Now that credit freezes are free, there’s little incentive to choose a credit lock to protect your information
How To Freeze A Child’s Credit
The Javelin Study found that data breaches are even more of a risk for minors than they are for adults. Last year, at least one minor in 11 percent of households had their data compromised as a result of a breach. Among those who were notified their information was breached, 39 percent became victims of fraud, compared to 19 percent of adults who were notified.
However, if there’s a credit freeze in place, fraudsters will be blocked from opening any new accounts in a child’s name. But before you can freeze your child’s credit, the first step is to find out if he or she has a credit file in the first place.
The credit bureaus don’t keep data on minors under the age of 14. After all, your toddler probably hasn’t taken out any loans. “There shouldn’t even be a credit file there,” said Linebaugh. “If there is, it’s usually fraudulent.” The only exception is if you added your child as an authorized user on a credit card or put any other credit in their name.
If there isn’t any credit file for your child, you’ll have to create one so that you can freeze it. To find out if your child has any credit information on file with the bureaus, you’ll need to contact each credit bureau individually and follow their process (minors 14 years old and up can visit annualcreditreport.com to request their own credit reports).
Experian: Start by filling out this form and mailing it, along with an extensive list of documents, to the address listed on the form. Alternatively, you can fill out the form and upload all the documentation via Experian’s online platform. Once you’re ready to freeze your child’s credit, you can do so online.
Equifax: Contact Equifax’s minor child department in writing (details here) to find out if your child has a credit file. To place or lift a credit freeze, fill out the minor freeze request form and mail it to Equifax along with required identification.
TransUnion: Start by filling out a child identity theft inquiry form. TransUnion will let you know if it finds a credit file, and if so, will launch an investigation into the matter. To place a freeze on your child’s credit, submit a request online.
If it turns out your child does have an existing credit report on file with any of the bureaus, you should also take the following steps in addition to placing a credit freeze:
- Contact each credit bureau and place a fraud alert on your child’s files.
- File a police report.
- File a complaint with the Consumer Financial Protection Bureau.
- Submit a fraud report to the Federal Trade Commission.
Remember, a credit freeze can prevent criminals from opening new accounts in your child’s name, but it can’t undo existing damage. If your child’s sensitive personal information, such as their birthdate and Social Security number, already fell into the wrong hands, there might be years’ worth of cleanup to do. But considering how easy (and free!) it is to freeze your child’s credit, there’s no reason to skip this step. It only saves you a potential headache.
