Credit freezes for kids

Putting the freeze on identity theft for children

There’s no age requirement for identity theft. The recent uptick in the frequency and severity of database breaches has some experts suggesting that parents should freeze their children’s credit reports. But that can be difficult, and sometimes impossible, depending on where you live. Here’s what you should know:

1 What is it? Credit freezes allow you to restrict access to your credit reports, preventing identity thieves from opening new, fraudulent accounts in your name. Children typically don’t have credit reports. If they do, someone has probably stolen their identity.

2 Why can’t I freeze it? All three major credit bureaus allow parents to freeze credit reports when a child’s identity has been used by a thief. But many states don’t require the bureaus to offer credit freezes if it hasn’t been compromised. That could change: A Senate-approved bill to loosen Dodd-Frank banking regulations includes a clause that would require credit bureaus to create files for those under 18 at a parent’s request. Once a file is created, it can be frozen. Only one credit bureau, Equifax, will create and freeze a report at a parent’s request regardless of where the parent lives.

3 Should I worry? Children may be at greater risk than adults. Carnegie Mellon University’s CyLab found the identity theft rate for kids was 51 times higher than that for adults, according to a 2011 report. The report found 10.2 percent of the children studied had someone else using their Social Security numbers; the rate for adults was 0.2 percent. Identity thieves target children because the crimes can go undiscovered for years.

4 Could it backfire? Experian and TransUnion, the other two major bureaus, still insist that parents shouldn’t rush to shut down their kids’ files. “A proactive file freeze is a drastic solution that we only recommend when a child’s identity is being used fraudulently,” TransUnion said. Creating a credit report for those younger than 18 can create problems of its own. The report links the child’s name to a Social Security number, information criminals could use for other kinds of fraud. That includes synthetic identity theft, where thieves use real and fake information to create new identities. It also costs money to create and to lift. Plus they can’t be set up online and parents have to keep track of the personal identification number needed to lift the freeze when the child is older than 18 and needs credit.

This article was provided to The Associated Press by the personal finance website NerdWallet.