I bet you never knew that it was possible to put what amounts to a permanent (well, until you remove it) freeze on your child's credit. I bet you never even thought about it. Well, you should be thinking about it, especially in this day and age (recession) when credit is tight and identity theft is rampant.
Your child has perfect credit, right? What's to prevent someone from steeling their social security number and going to town? Well, YOU are!
Don't know what a "credit freeze" is? Well, according to USA Today, "The weapon is the credit freeze, also known as a security freeze. When you place a freeze on your credit reports, credit card issuers, lenders and others can't check your credit history. Without that information, they won't issue credit. And that also means criminals can't set up new accounts in your name."
As you probably already know, there are three credit reporting agencies and each has to be notified separately of your request. The cost is typically $10 per request, or $30 (give or take) per child and all three agencies basically request the same thing, identification (including proof of residence like a utility bill and social security number), the processing fee, and a letter stating your intent. And, the letter should be certified (some require it) to be certain that the sensitive information you are mailing gets to the right people.
Now, this is a no brainer for your minor child, right? I mean you don't need a 10 year old with a credit card. But, a security freeze might be something you want to consider for yourself as well. However, you should be wary. "A credit freeze will protect you from new-account fraud, but it has a downside: If you want to apply for a mortgage, car loan or credit card, you'll need to contact all three of the main credit bureaus — TransUnion, Experian and Equifax — and unfreeze your credit reports. Most states give the credit bureaus three business days to temporarily lift or remove the freeze, a problem if you're in a hurry to get a loan."
Did you know that "new-account fraud is one of the most pernicious forms of identity theft? If someone uses your credit card number to buy, say, designer shoes online, you can dispute the charges when you receive your credit card bill. In new-account fraud, though, criminals use stolen information to open accounts in your name. Sometimes, they arrange for the bills to go to a different address. You might not realize you've been victimized until the unpaid bills have trashed your credit record."
So, it's something to think about. Not everyone has $30 (give or take) laying around, especially if you have several children, but think about it this way; $30 is more than worth the expense due to the hassle you have to go through to get rid of identity theft and credit fraud. Am I right?
More information:
- Equifax Security Freeze (certified letter required)
- Experian Security Freeze (on line available, but not for minor children)
- Transunion Security Freeze (on line available, but not for minor children and they sent back the fee meaning that to freeze the credit of a minor, it is free!!)
ETA: New story in the news on 04/01/09: An 11-Year-Old With Bad Credit? Mother Fights for Son's Identity
ETA (4/15/09): Got letters back from all three credit reporting agencies. They all say that freezing the credit of a minor is not possible since an account for them does not exist. HOWEVER, you have the option of directing them to open an account and add a letter stating that she is not to be allowed credit until she reaches 18 years of age.
I am not sure what the better course of action is but the lady at TransUnion was adamant that it's not possible for a minor to have credit extended to them. I guess she hasn't seen the article I linked to above.
I'll keep you updated!
