Why You Need to Check Your Kids Credit Score

We have all become accustomed to the ritual of checking our credit scores and credit reports. It has become much easier than in past to stay on top of this task. Our credit card statements and credit monitoring services passively update us on changes in our credit reports. We are starting to hear more cases from clients that they are finding out their children’s identity has been stolen. This creates a brand new set of issues that parents and children will have to address now and in the future.

Kids are the target of cyberthieves because their identities offer a clean slate to apply for bank accounts, credit cards, government benefits and tax breaks. They are also rarely checked by parents making them a prime target. With adults, identify theft is usually caught quickly because of monitoring services or you apply for credit and find out there is an issue. It can take years before you find out a child’s identity has been stolen. We are seeing that when high schoolers apply for college financial aid it is often the first time anyone finds an issue.

How does your kid's identify get stolen?

Our data and our kid's personal info is everywhere. Schools, sports, dance class and summer camps all have personal details about your kids. Many of these organizations or groups may have a data breach and never even realized it. 20% of schools in the US have reported a data breach to parents. The credit bureaus report that about 5% of their calls relate to child identity theft and the numbers are growing each year. Experts say those numbers may understate the problem because parents are often unaware of children being targeted and don’t report it.

What should you be watching for?

The clearest sign that your child’s identity has been taken they receive collection notices or letters from the IRS looking for unpaid taxes. Other subtle indications you might have an issue is your child receives credit card offers or loyalty program solicitations in the mail. Some people have reported that when their teenagers have gone to apply for their first drivers' license they were notified that someone else has previously applied for one using their information. All of these items can be corrected but it is better to catch things early to limit any potential problems.

How to check your kid's credit report?

If you suspect your kid's identity may be compromised you can go to Experian, TransUnion or Equifax and pull their credit report. Experian has a section called minor child instructions. If your kids are over the age of 13 you should be able to pull their credit report annually. In the event you do find their credit has been used you can go the FTC for additional guidance or follow the instructions on the credit report to remove fraudulent accounts.

The easiest way to minimize this risk is to limit who has personal information about your family. Share personal info only with groups that absolutely need it, although this is easier said than done. The impact of identity theft on a child can have a long term impact if not caught relatively quickly. It could cause your child to pay higher insurance rates, have a higher interest rate on loans and have to put larger down payments for apartments or with utilities when they are adults. Checking their credit reports once a year will help reduce this nuisance from becoming an extended issue.

Please contact me at 913-871-7980 or by email to discuss your financial planning and investment management needs. You can sign up for our monthly newsletter here. Follow me on Twitter @CastlebarAM.

Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.