Why it's crucial for parents to secure their child's credit at an early age.

• The problem of identity theft among children under 19 is on the rise, as per Federal Trade Commission statistics.
• By freezing a minor's credit with Experian, Equifax, and TransUnion, parents can prevent future credit issues and simplify the process of obtaining a credit card, car loan, or student loan when their children become adults.

To safeguard their children's financial future, many parents overlook a straightforward solution: freezing their minor's credit.

In the event of a major data breach that exposes Social Security numbers of numerous Americans, parents can take an additional step to safeguard their credit by locking it.

The process of credit locking for a child entails contacting the three major credit bureaus - Experian, Equifax, and TransUnion - and submitting the necessary documentation, such as the child's birth certificate, Social Security card, proof of address, and parent identification. After the bureau creates a credit report for the child, it locks it to prevent the issuance of loans or credit cards using the child's personal information. The freeze can be lifted temporarily or permanently by the parent or, in certain circumstances, the child.

Even if there are no signs of a minor's credit being compromised, parents can take proactive steps to protect their credit.

Restoring a child's credit can be a lengthy and emotional process, but the cost is minimal compared to the lengthy and emotional credit restoration process for adults whose credit is stolen. According to Kim Cole, community engagement manager at Navicore Solutions, a nonprofit credit and housing counseling agency, the emotional impact of a child's stolen credit can be much greater. It can take years for a child to become aware of the problem, and during that time, the damage can continue to grow.

Loretta Roney, president and CEO of InCharge Debt Solutions, stated that identity theft against young children is often overlooked until they become older teenagers or young adults applying for credit cards, loans, or other financial products.

Identity theft among children under 19 is becoming increasingly common, with this age group accounting for 3% of all identity theft reports in the first half of 2024, according to Federal Trade Commission data. In comparison, this age group accounted for only 2% of identity fraud reports annually between 2021 and 2023.

Financial experts suggest that thieves may use a child's Social Security number, name, address, or date of birth to apply for government benefits, open bank or credit card accounts, apply for loans, sign up for utility services, or rent a place to live. Although locking a child's credit won't prevent all of these, it's a crucial step in protecting their financial future.

Not only are strangers committing fraud against children, but a friend's uncle also destroyed his credit and used his niece's name and Social Security number to open credit cards and max them out. The bills were sent to the young woman's house, and she discovered the fraud four years later when she tried to buy a small fixer-upper and found she had nearly $50,000 of debt in her name and a credit score in the low 500s.

The niece faced difficulties in resolving a dispute with credit bureaus, so she applied for a secured credit card in the meantime. Despite her low credit score, she was able to qualify for a traditional card after a few years, but the delay in home-buying resulted in additional costs.

Check to see if the child has a credit report

It's advisable to verify with the three major credit bureaus whether a report on a child's credit exists. This is typically done when someone has fraudulently used the minor's name to obtain credit or when the child has been added as an authorized user on an adult's credit card.

Parents can check if their child has a credit report by mailing a letter to each credit bureau, including a copy of the child's birth certificate, Social Security card or document from the Social Security Administration showing this number, and a copy of the parent's driver's license or government-issued identification, with current address. Legal guardians must provide authenticating documents to the credit bureaus.

Report any fraudulent activity on the report to the companies where it occurred, the three major credit bureaus, and the FTC, providing all necessary details about the child identity theft.

If the report is clean, the next step is to lock the child's credit.

If needed, freeze a child's credit

The process for initiating a credit freeze for a minor child varies slightly depending on the credit bureau and the age of the child. To initiate a credit freeze for a minor child, parents need to follow the precise instructions for each credit bureau. For Equifax, parents need to fill out a form online and submit it via postal mail. Minors who are 16 or 17 may request their own security freeze by phone or by mail. The websites for Experian and TransUnion provide further details on their respective processes, which includes document requirements and mailing addresses. It can take a few weeks for the bureaus to process these requests.

Keep good records for unlocking later in life

To ensure their child's credit remains secure, parents must safeguard the PIN number they use to lock their child's credit account, which can be temporarily unlocked when the child turns 18 and applies for a credit card, advised Bruce McClary, senior vice president of membership and media relations at the National Foundation for Credit Counseling.

The process of unlocking credit reports may not always be smooth and may require time. For example, Equifax requires written requests with supporting documentation for identity verification purposes. Once you turn 18, Equifax enables you to manage the security freeze online.

Educate children early on protection of personal information

It is advised that parents discuss with their children the importance of being cautious when sharing personal information online, such as on websites, apps, and social media platforms. They should also remind children to keep their Social Security number private.

Parents may want to evaluate credit and identity threat monitoring services, which can be fee-based and offer more comprehensive protection, including identity theft insurance and fraud resolution services.