Credit bureau policies vary when freezing a child's credit
Proactively preventing loans in your child's name may not be possible
By Barry Paperno | Published: September 22, 2016
Speaking of Credit
Dear Speaking of Credit,
Why can't I put a credit freeze on my children under the age of 18? – John
A credit freeze, also known as a security freeze, lets you restrict anyone else’s unauthorized access to your credit reports and scores by essentially shutting the door to all credit history associated with your Social Security number. Then, when no credit report or score is available to a creditor evaluating a fraudulent credit application, the application is typically declined and fraud has been prevented.
Credit freezes can be applied either reactively, following fraudulent activity, or proactively to prevent future identity theft. To be effective, a credit freeze should be applied at all three major credit bureaus – Equifax, Experian and TransUnion – since a consumer has no way of knowing which credit bureau is likely to be accessed by a creditor receiving a fraudulent application.
By being both a proactive and reactive protection tool, a credit freeze differs from the other common fraud prevention tool – a “fraud alert” – that is only added to a credit report after a crime has been committed. A fraud alert states that the consumer has been a fraud victim and instructs all creditors to contact the consumer directly before granting credit in this person’s name.
Why put a credit freeze or fraud alert on a minor’s credit report? After all, how would a child who cannot legally enter into a credit account contract or incur debt even have a credit file? Unfortunately, credit files belonging to children have become quite common. They originate when a credit account is illegally opened using a minor’s Social Security number and is reported by the creditor to the credit bureaus.
A child’s Social Security number can be easy pickings for fraudsters – often relatives or family friends – with bad credit histories of their own. A Social Security number not linked to any negative credit can be the key to creating a fake identity capable of opening credit accounts, rent apartments, start utility service, or even apply for a job – any transaction that requires an untainted Social Security number.
What can also make the fraudulent use of a child’s Social Security number especially damaging to the minor, and appealing to the criminal, is that the fraudulently created credit file can go undetected for many years. Often it lasts until the child grows up and applies for a job, credit card or student loan.
Regardless of the reason, any adult in the U.S. with a credit file can place a credit freeze on her own files at the three major credit bureaus with little effort, though there is often a charge for doing so. Yet parents looking to place a credit freeze on their child’s credit report when not due to prior fraudulent activity may be in for an uphill battle.
Of the three big credit bureaus, only Equifax allows parents in all 50 states to freeze the credit file of a minor who either has or has not been a victim of identity theft. And while, throughout the U.S., Experian and TransUnion will also comply with such requests when a child has been a fraud victim, they will only place a credit freeze for a nonvictimized minor in the 22 states where laws require them to do so.
States requiring credit freezes for minors
These 22 states require the credit bureaus to grant a parent’s request for a security freeze on any child’s credit file: Arizona, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Michigan, Montana, Nebraska, New York, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia and Wisconsin.
If you don’t live in one of these states, and you’re looking to place a credit freeze on your child’s credit file, expect some of the following varying – and often confusing – sets of requirements:
- Equifax allows parents from any state to set up a freeze for any minor child with a Social Security number. They will create a credit file for the child if one doesn't already exist and then prohibit access to it until the parent or child, once reaching adulthood, requests the freeze removed.
- Experian will only freeze a child’s credit file when one already exists – meaning there was prior ID theft, since a child cannot legally enter into financial agreements that would legitimately create a credit file. Unlike Equifax, Experian will not create a credit file for a nonvictimized minor for the purpose of freezing it.
- TransUnion not only restricts credit freezes to existing credit files for minors, but requires that a parent also prove fraud has occurred before the existing file can be frozen. And, as with Experian, there is no option for parents to have a credit file created and frozen for minors who have not been victims of fraud.
The bottom line is that while a credit freeze is available to any child in the U.S. whose Social Security number has been compromised, only nonvictimized minors living in the above 22 states can have their identity protected via a credit freeze at all three major credit bureaus.
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