A New Plan to Fight Child ID Theft: Automatically Freeze Kids' Credit

Identity thieves often target children for many reasons: First, children haven’t had a chance to damage their credit yet, so the clean slate of a child’s blank credit history can be appealing to someone who may have trashed theirs. Additionally, because kids shouldn’t have a credit history yet, few parents or guardians are checking to see if credit has been fraudulently opened in the child’s name, which allows thieves to go about their business unnoticed. There are various estimates of child identity theft that say there are hundreds of thousands of child identity theft victims reported each year.

If it were impossible to open credit accounts using the Social Security number of someone who is younger than 18 years old, perhaps child identity theft wouldn’t be an issue. That’s what Sen. Charles Schumer (D-N.Y.) has in mind with a bill he’s proposing, which would automatically freeze minors’ credit reports until their parents un-freeze it (parents can do this voluntarily in some states, including New York). When a consumer requests a credit freeze through the three major credit reporting agencies — Equifax, Experian and TransUnion — new credit accounts cannot be opened, not even by the rightful owner of the credit history, until the owner takes steps to un-freeze their files.

People often do not find out they’ve been a victim of child identity theft until they apply for their first lines of credit or try to secure services in their own names for the first time. It can be frustrating and traumatic to try and get a student loan, a credit card or an apartment for the first time, only to learn that someone has been abusing your personal information for years. This can cause setbacks for people who are trying to establish a financial foundation.

Schumer’s bill could be a protective measure against such problems, but it may not be a complete solution to a crime that many studies show has been growing — at least, it’s being reported more frequently.

The credit freeze could help prevent credit fraud, but it may not if the fraudsters are the child’s parents, as studies have shown is often the case. On top of that, a credit freeze only prevents credit fraud. An identity thief may also assume a child’s identity to get medical care or as an alias when committing crimes. These forms of identity theft can be dangerous and costly, with the thief’s information getting mixed with the victim’s.

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There is no catch-all solution for identity theft, whether or not it involves children, which is why it’s important for consumers to monitor as many aspects of their personal information as they can. A credit freeze can certainly be part of a good identity-theft protection strategy, but it’s crucial that consumers understand its scope and do not rely exclusively on it.