Identity theft it's a constant threat these days. With the number of the main data breaches that occurred in the last years, for example the unpublished Equifax violation in 2017, you've probably already experienced some form of financial fraud.
You could keep an eye on your finances just for that reason, but there's someone else who is particularly susceptible to becoming a victim of identity theft: your child.
Fortunately, on September 21, a new law came into force that allows credit to be frozen, a useful preventive measure, free of charge. Here's how and why you should also freeze your child's credit.
Theft of child identity is a growing problem
A Javelin Strategy and Research study found that over one million children were victims of identity theft in 2017. Two-thirds of these victims were under 8 years old.
If they are lucky, parents may receive a notice addressed to their child by a collection agency or IRS to tip. Usually, however, it is not until the children's victims are much older that the fraud is discovered. At that point, extensive damage has already been done.
"When you commit fraud on an adult, that adult is busy building his own life: buying a house, getting a car, credit checks are more likely to occur and they are more likely to discover fraud," he said Jerry Linebaugh, founder of JLine Financial in Baton Rouge, Louisiana. "But in the case of a 2-year-old, they will not control their credit for at least a dozen years, it's a long time [criminals] he can go out there and not just use that fraudulent account, but sell the identity ".
When the child actually needs access to credit, whether it is to receive some kind of federal benefit, rent the first apartment or take out a student loan, their credit has been destroyed.
Placing a lock on your child's credit file can prevent scammers who have access to their personal information from actually using it.
What is a credit freeze?
When you block credit, limit access to your credit reports. If someone tries to apply for a credit card, accepts a loan, rents an apartment, opens a mobile account or does something else in your name that requires someone to check out your credit report, he will not be able to do it for a long time like freezing on the spot. So, when you want to claim your credit, you must first "defrost" your credit file.
In the past, setting up a credit lock was a tedious and rather expensive process. He asked you to contact each credit bureau individually, put a lock on your file with that particular office and pay about $ 10, depending on where you lived. If you did not freeze your credit with all three main offices – Experian, Equifax and TransUnion – your personal information was still susceptible to fraud. If you want to unlock it, you should repeat the same process. So to re-freeze … well, you understand.
However, once the data breach of Equifax occurred, the process of freezing the credit with the company went from a moderate disadvantage to total nightmare. The telephone lines were blocked and the site kept crashing; people waited until the middle of the night to try to get still without success. In fact, following the violation, less than 1 percent customers have taken the trouble to freeze their credit.
Fortunately, things have calmed since then. And if there is a positive side of the whole situation, it is that Congress has responded by creating the Economic growth, reduction of regulations and consumer protection law, which now requires credit institutions to provide free credit blocking. And they have to do it quickly: the blocks must be implemented within the next business day and the release (even free) should not take more than one hour. Parents can freeze the credit file of any minor under the age of 16; those aged 16 or over are treated as adults and can freeze their credit.
Credit lock against blocked credit
Linebaugh noted that there is an important distinction to be made when talking about credit lock and similar "credit locks".
Equifax has begun to offer credit locks free of charge as a result of the violation of company data. This service is similar to the one already offered by TransUnion (also free) and Experian (available as part of a credit monitoring package, the cheapest of which costs $ 9.99 per month).
A credit lock is similar to a credit lock in many ways, but there are two key differences.
First of all, it is much easier to unlock a credit report than to unlock it. Secondly, it absolves the credit bureau from any legal liability in the event of a lock failure. This is because federal law regulates credit locks, but not credit locks. So if there is a problem – the latch has not been entered as required, or the information has been leaked – you may have a legal appeal. A credit block, on the other hand, is a proprietary product and the service agreements state that there is no guarantee that the instrument is infallible.
Now that credit locks are free, there's no big incentive to choose a credit lock to protect your information
How to freeze a child's credit
The javelin study found that data breaches represent an even greater risk to children than adults. Last year, at least one minor in 11% of families had their data compromised as a result of a violation. Among those who were informed that their information was violated, 39% became a victim of fraud, compared to 19% of adults who were informed.
However, in the event of a credit lock, fraudsters will be prevented from opening new accounts in the name of a child. But before you can freeze your child's credit, the first step is to find out if it has a credit file in the first place.
Credit agencies do not keep data on minors under the age of 14. After all, your child probably never contracted any loans. "There should not even be a credit file there," Linebaugh said. "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 entered other credits in their name.
If there are no credit files for your child, you will need to create one so that you can freeze it. To find out if your child has credit information in the archive with the offices, you will need to contact each credit bureau individually and follow their process (under the age of 14 can visit the annualecreditreport.com website to request their credit reports).
Experian: Start by completing this form and sending it by post, along with an extensive list of documents, to the address indicated on the form. Alternatively, you can fill out the form and upload all the documentation via the Experian online platform. Once you are ready to freeze your child's credit, you can do it online.
Equifax: Contact the underage department of Equifax in writing (details here) to find out if your child has a credit file. To place or lift a credit block, complete the lower block request form and send it to Equifax along with the required identification.
TransUnion: Start by filling out a Infant identity theft application form. TransUnion will let you know if it finds a credit file and, if so, will initiate an investigation into the matter. To block the child's credit, send an online request.
If he discovers your child does having an existing credit report in the archive with any of the offices, you should also take the following measures in addition to placing a credit lock:
- Contact each credit bureau and make a fraud alert on your child's files.
- Send a police report.
- Submit a complaint to the Consumer Financial Protection Bureau.
- Submit a fraud report to the Federal Trade Commission.
Remember, a credit lock can prevent criminals from opening new accounts in your child's name, but can not undo the existing damage. If your child's sensitive personal information, such as their date of birth and social security number, has already ended up in the wrong hands, it may take years of cleaning. But considering how easy it is (and free!) To freeze your child's credit, there's no reason to skip this step. It only saves you a potential headache.