Foster youth: How to protect and build credit
September 3, 2019
Monitoring credit activity is crucial for anyone – but especially for those in the foster care system. The odds that a child who’s in the system will be at risk of having their personal information compromised is exponentially higher than those who aren’t. And with identity theft being a primary method of financial fraud, it adds another layer of sensitivity to an already sensitive process.
Credit protection is priority number one. Whether it’s for a foster child who wants to build their own credit history after they turn 18; or for a foster parent who may have to deal with their child’s complicated personal history, the importance is the same. The goal is to create a financially stable life into adulthood. So, establishing a habit of checking credit reports regularly will go a long way toward reaching that goal.
How identity theft affects your credit
If someone else gets access to your full name and Social Security number, they can very easily open credit cards and take out loans in your name. Once approved:
Since all of this is happening without your knowledge, the crime can go undetected for a long time.
Outside of feeling violated, your credit score takes a major hit. FICO® and VantageScore are two of the most common credit scoring companies. They turn the information listed on your credit report into scores ranging from 300 to 850, with higher numbers being preferable. For every ding that shows up on your report – missed payments, high debt, and collection accounts – your score gets depleted.
Damaged credit reports and poor scores will impact your ability to do everything from qualifying for any additional credit cards to renting an apartment. And you may want to borrow money to purchase a home or car in the future, at which point, good credit scores will be important.
Think you might be a victim of identity theft? Know your rights.
Although being a victim of identity theft may make you feel powerless, know that you are protected by law against all kinds of abuse, including financial. The Child and Family Services Improvement and Innovation Act was developed with you in mind. The provision most relevant to you on this topic:
For any youth in foster care at age 16 or older, the state must annually obtain the child’s credit report. It will be provided to you at no cost, and include an explanation about what is being listed and appropriate guidance.
So if there are errors or evidence of fraud, your case worker should be able to help by pulling your reports and assisting with the dispute process.
You can also have your credit report frozen, and it’s usually a good idea. This protects you by preventing your credit report from being accessed. By law, a parent or guardian may freeze your credit report for you if you’re under the age of 16. If someone were to apply for credit using your personal information, the lender would not be able to check your credit report. Without that access, it would be much more difficult for someone to open a credit product in your name.
How to check your own credit report
Although the law stipulates that your caseworker must pull your credit report and share it with you along with information on how to deal with problems, you can also access your credit report on your own. As long as you’re at least 13-years old, whether you’re in the foster care system or not, you can check your credit the same way an adult would.
Log into AnnualCreditReport.com. Once there, you can obtain your report from the three major credit reporting agencies: Experian, Equifax, and TransUnion. You may get one complimentary credit report per agency every year.
These agencies do not knowingly create reports and keep data on anyone younger than 13, so if you enter your personal information and nothing comes back, that’s perfectly normal. Most children under 18 won’t have a credit report yet. So, while you may be at an increased risk of identity theft, you can at least rest assured knowing a report hasn’t been created without your knowledge.
However, just to be sure, here are some warning signs that a credit report has been generated in your name:
How to dispute fraudulent activity on your credit report
In the event that you do have a credit report and spot signs of identity theft, dispute it with one of the credit reporting agencies. This is where your caseworker comes in, but you can also do it yourself.
If you are a foster parent and suspect your child may have been a victim of identity theft, read these instructions on how you can freeze a minor’s credit.
Thankfully, you have clear evidence that the accounts opened in your name are not yours, because you aren’t legally old enough to sign a contract.
The easiest way to remove inaccuracies from your credit report is to visit one of the credit reporting agencies’ websites. Once you dispute the data, the other two agencies will be alerted to the investigation.
On the dispute form, you can provide an explanation for why the information on your report is incorrect. Include your date of birth and current age to indicate why you couldn’t have legally opened the account. The item(s) in question should be removed after an investigation, which usually takes fewer than 30 days.
As per the Federal Trade Commission, you should also contact the companies that were affected or used to commit fraudulent activity. For example, if someone opened a credit card in your name, call that issuer and ask to be connected to the fraud department. (You may need an adult’s help with this kind of communication, so don’t hesitate to contact your caseworker.)
Tell the representative that you were a victim of identity theft, and that the account is fraudulent. Ask them to close the account and send you a letter confirming that you are not responsible. It’s a smart idea to back the conversation up with a letter that summarizes the conversation you had. Attach a copy of your birth certificate as proof that you are not liable for the debt and the account is not yours. That should do the trick.
If your caseworker isn’t being helpful or you’d rather look elsewhere for assistance, Eva Velasquez of the Identity Theft Resource Center recommends looking elsewhere for resources. “You need someone you trust on your side,” says Velasquez. “Reach out to the Federal Trade Commission, your local police department, the Department of Health and Human services in your area or a nonprofit in your community that can provide you with guidance. Overcoming identity theft can be tough but can absolutely be done.”
In the meantime, be careful not to expose your personal identification documents for risk of anyone else misusing your information. “Don’t overshare your information on social media and online accounts,” says Velasquez. “For example you may be proud that you finally got your driver’s license, but do not take a picture of it and post it online.”
Building your credit once you’re financially independent
Now comes the exciting part: taking control over your credit destiny. Once you reach the age of 18 and you’re ready to start charting your own financial course, here some signposts that will help:
Dealing with the fall-out from identity theft is never fun, no matter your age or how it happens. As you take the steps to fix the damage and move forward, there are times when you may feel frustrated or hopeless. Take a breath, ask for assistance from a truly helpful individual or organization, then preserver. You have your whole life ahead of you and this hardship doesn’t have to define it.
How parents and guardians can freeze a child’s credit report:
Refer to this TransUnion page for information on how to place a credit freeze.
P.O. Box 380
Woodlyn, PA 19094
Fill out this credit freeze form from Experian’s website. You will need to include:
On the form you will write:
your name, address, Social Security number, Date of Birth, and home phone number
Experian Security Freeze
P.O. Box 9554
Allen, TX 75013
Or overnight to:
701 Experian Parkway,
Allen, TX 75013.
Complete and download this minor freeze request form. You will need the following pieces of information and documentation:
On the form you will write:
Equifax Information Services LLC,
P.O. Box 105788
Atlanta, GA 30348