A federal law that recently took effect allows you to freeze your credit file for free to prevent fraudsters from stealing your identity, going on spending sprees and damaging your good name.
But here’s something you may not have thought of: You should freeze your children’s credit, too.
Regardless of whether you have a toddler or a teen, experts say it is arguably more important to freeze your child’s credit file because an identity theft problem could go undetected for years. Then when they’re old enough to get a credit card or apply for a car loan or mortgage, the consequences can be pricey and turn into a real mess.
How can your kids be at risk when they have no credit history? There is plenty of personal information out there for identity thieves to steal, from Social Security numbers to bank account information to sensitive information on cellphones. Adding a minor as an authorized user to your credit card can also create a credit file.
Children make up a small number of all identity theft cases, according to Javelin Research and Strategy. But, the research company reports, there were still more than one million child identity theft victims in the U.S. last year.
That’s why it pays to take the time to place a freeze on your and your children’s credit.
A freeze prevents lenders from pulling a person’s credit report, essentially preventing a thief from opening new credit accounts in your child’s name. Generally, the credit agencies will create a credit file for your child and place a freeze on any activity. The new law allows you to temporarily lift the freeze, say, when you’re applying for a loan.
“Think of a credit freeze as a state-of-the-art home security system that keeps the bad guys out,” said Ted Rossman, an analyst with CreditCards.com.
Congress passed the law in response to last year’s massive breach at Equifax, which exposed the private information of more than 145 million Americans.
CreditCards.com found that only half of all adults had checked their own credit score or history in the six months after the Equifax hack came to light.
“If you’re not vigilant regarding your own credit, chances are you are not thinking of someone stealing your toddler’s identity and racking up fraudulent charges,” said Rossman.
Rossman said he has heard stories of people whose identities were stolen when they were children, but they didn’t realize it until they were in college. Fraudsters typically use the personal data of children to create a phony credit profile.
According to the Federal Trade Commission, it takes the average identity theft victim 30 hours’ of work to unravel all of the effects of identity theft.
“It’s probably going to be far worse if the child I.D. theft went on for many, many years,” Rossman said.
If you are considering freezing your children’s credit information, all three major credit bureaus — Equifax, TransUnion and Experian — have details on their websites on the process to follow.
Keep in mind, however, that it is a bit more difficult than freezing your own, which can be done online or over the phone. For children under 16, you need to mail a written request to all three major credit bureaus.
You will also need to provide extra documentation, such as a copy of a Social Security card or birth certificate. As a parent or guardian, you may also be required to provide proof of your identity, such as a driver’s license or guardianship documents.
Children who are 16 and 17 can request their own freeze at the three credit bureaus, although they may need to provide a copy of their driver’s license.
Some parents may feel that freezing their own credit is a hassle because they need to lift the freeze every time they apply for credit, Rossman said.
“But since minor children aren’t in the market for credit,” he said, “a credit freeze provides all of the benefits but none of the hassle.”