Posted in Blog

Money Planning Series: #6 Protecting Your Children’s Credit and Yours

Our county school district recently announced that multiple teachers and students had their data stolen and posted on the dark web. There have been few details shared and no indication of exactly who or what is now available for others to see or purchase online. No doubt, our kids’ identities are at a higher risk now of being stolen than ever before.

In the past I’ve sporadically checked my sons’ credit reports, just to make sure no one is using them. I’m now in the process of checking their reports again and then freezing their credit.

Credit Reports

Credit reports are documents that provide details about your credit, including your credit history, activity, and current status within your credit accounts. By reviewing your credit reports, you can see if others have opened credit accounts in your name or if any companies have mistakingly reported information about your accounts to the credit reporting agencies (e.g., like credit card bills or mortgage payments not getting paid on time).

You can check your credit reports (and those of your children) for free at annualcreditreport.com. According to U.S. law, you can get one free credit report from each credit reporting agency within a 12 month period. There are three major credit reporting agencies: Experian, TransUnion, and Equifax.

If you wanted to be able to regularly check on your credit throughout the year, here’s how you could do it yourself for free. Every four months, request a credit report for each member of the family from one of the credit reporting agencies. So, for instance, in January request reports from Experian, in May go to TransUnion, and in September go to Equifax. I’d have to put this to-do item in my Cozi calendar so I wouldn’t forget.

Requesting a credit report is easy at annualcreditreport.com. You fill out a form, request which credit reporting agency you want a credit report from, and then answer a few security questions. Then you can review the report online to make sure the information presented is accurate. There are further directions on the credit report explaining what to do if you find an inaccuracy. I just requested and reviewed my credit report, and it literally took all of five minutes.

Visit the Consumer Financial Protection Bureau for more information about credit reports and how to read them.

Credit Freeze

A credit freeze stops potential creditors (like loan officers) from accessing your credit file. By placing a freeze on your credit, you can stop a bad actor from using your identity to open credit in your name (e.g., like a car loan or a credit card). Now, a credit freeze stops ALL potential creditors from accessing your credit file, and it doesn’t distinguish between illegitimate and legitimate requests. This means that you will need to unfreeze your account to access your credit (like when you want to apply for a home mortgage loan or refinance your credit card debt).

The Federal Trade Commission gives guidance on how to place a credit freeze at all three credit reporting agencies. Basically, you must visit each credit reporting agency’s website to follow their process to request a freeze. I just did it for myself, and it took about 5 minutes per site (while being regularly interrupted by Mr. 5 year old during his virtual school time).

To place a freeze on the kids’ accounts, I need to mail a letter or form, like the Minor Freeze Request Form for Equifax, to each reporting agency along with proof of their identity and mine. The other two credit reporting agencies have similar requirements, so if you collect the needed information from one credit reporting agency, you should have what you need for the others. That’s a bit of a pain in the neck, but it is manageable.

I figure the boys aren’t going to be accessing their credit any time soon, so we better protect it for them. All in, I think this task of running credit reports and freezing credit for all four of us will take me an hour or two of my time. It’s a well worth it return on investment for me to protect the entire family and give me some peace of mind.

Photo by Clint Patterson on Unsplash

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