Crooks like to use children's identities to commit credit fraud because the crime can go undetected for years, until the child becomes an adult and tries to get a credit card or take out a loan in his or her name. Some teens and college-age students in Utah have found out the hard way that their identities have been stolen.
"We've seen Utah children with mortgages, auto loans, credit cards, you name it," said Scott Morrill, manager of the Utah attorney general's program. "We've seen cases where children have over $500,000 worth of debt."
"A large number of children, some as young as infants, have had their identities stolen, and their parents don't know about it."
At no cost, parents may enroll their children in the Child Identity Protection program, a partnership with credit-reporting agency TransUnion. After they enroll, the program places a warning on a child's credit record and puts them into a "high risk fraud" database.
If someone tries to use a child's personal information to get approved for credit, a warning will pop up saying that the Social Security number belongs to a minor. Ultimately, it's up to the creditor to heed the credit warning, but most lenders are likely to do so, given that many fraudulent loans end up in default.
In addition to alerting creditors, TransUnion will periodically check its files to see if there is any credit activity associated with a child enrolled in the Utah program. If there is, the bureau may contact the child's parent directly.
The program is an alternative to pricey initiatives that have been launched to address the issue of child ID theft. Credit reporting agency Equifax, for example, recently added a Equifax Complete Family Plan. For $29.95 per month, the program provides credit monitoring for two adults and two children. Details are available at Equifax.com/family.
I've never been a fan of credit-monitoring programs because of the cost, usually in the form of a monthly fee. Instead, I recommend freezing your credit file and checking it at least once a year. With a credit freeze, adults can effectively lock their credit reports, making it nearly impossible for criminals to tap their credit. For now, a the credit bureaus don't offer credit freezes for children.
The Child Identity Protection program doesn't lock a child's credit report; it provides only the warning message that should make it more difficult for someone to use a child's personal information. The warning stays in place until a child reaches the age of 17; after that time they are eligible to freeze their credit records.
Never heard of a credit freeze? It is the most effective way to protect your credit information from crooks who could use your information to get a credit card, loan or even a mortgage. When you lock your credit file, you are making it extremely difficult for crooks to apply for new credit accounts using your information. With a lock, while your existing creditors can still examine your credit report, most anyone else can't gain access unless you temporarily unlock your file for them.
It takes most people about an hour online at Experian.com, Equifax.com and TransUnion.com to "freeze" or "lock" their credit files with the nation's three credit-reporting agencies. You'll have to pay $10 per bureau to lock your file, for a total of $30. If you have a spouse, each of you will end up paying this amount, or a total of $60. Once your file is locked, you'll be assigned a PIN number that you can use to temporarily unlock your file while applying for a loan, credit card, cellular phone contract or new utility account.
Want to refinance your home or take out a loan? You'll have to pay another $10 per bureau, or a total of $30 per person to temporarily unlock your file for a day or two so your lender can review all three of your credit files. In some cases, if a creditor uses only one credit bureau, you'll pay only $10.
The good news is that you can temporarily unlock your credit files online within a few minutes. To access Experian's credit freeze center, go to bit.ly/fmDzUS. Go to bit.ly/10lMYq for Equifax and bit.ly/6t1LcG for TransUnion.
Although the Child Identity Protection program doesn't offer as good protection as a credit freeze, it's a great first step. And the attorney general's Office says it will continue to refine and build on the program over time.
"It's the best system out there that we have right now to protect children from identity theft," said Morrill.
Lesley Mitchell writes One Cheap Chick in daily blog form at blogs.sltrib.com/cheap. firstname.lastname@example.org Facebook: Facebook.com/ One Cheap Chick Twitter: @cheapchick
For child I.D. protection
Go to www.idtheft.utah.gov/