The mind of a Mom is a neverending whirlwind of to-do list items, worries, “I’m exhausted,” Disney songs embedded into our subconscious, “I want cookie dough/wine,” and (sad to say) fear for our children.
It’s what we do.
As a Mom to a sassy 4-year old, I’m constantly wondering, “Am I doing enough for my daughter?” Specifically, I worry about her future…
“Will her schoolmates at her new preschool be nice to her?”
“Am I doing enough on teaching her to be a good & kind human?”
“Will she find true love?”
“Will she have her identity stolen and her credit ruined!?!”
I write solely about personal finance (specifically for moms), so my brain may go a few extra steps down the money rabbit hole in that area.
As parents, we love them, we protect them, and we teach them. Those are our most important roles. I want to focus on the “protecting” aspect in this post.
1. Protecting Your Child’s Credit Report With a Credit Freeze
There have been so many data breaches lately, from huge companies that we “should” be able to trust.
Remember when Target announced that over 41 million people’s private data was stolen? Mom’s practically swooned right in the Dollar Spot!
Having your personal info stolen and used nefariously can be a HUGE headache!
Your credit could be ruined, and take years and years to clean up. Not to mention, the mountains of paperwork, hours of phone calls, and having your finances on hold during that entire time!
If you become a victim of identity theft, it could impact your ability to secure a loan to move to a new home.
Even getting a new cell phone takes a credit check. If your credit doesn’t make the grade, then no more Candy Crush for you!
Our children’s identity is also becoming more attractive to hackers.
Maybe it’s because it would be years and years until parents finally realized it. I mean the average 12 yr old isn’t getting a car loan or a great travel rewards credit card, so why would you even check their credit history?
One of the leading credit bureaus, Experian has estimated that Child identity fraud or theft will affect 25% of kids before turning 18. (source)
So what can happen when your info gets stolen? Here are Experian’s stats from 2017…
Doing a credit freeze would make most of these instances go away. Poof! Gone.
What is a credit freeze, you ask? Basically, you are telling the three main bureaus not to allow anyone to open a new credit account with your credentials.
If you try to open an account with a freeze on, the credit application will be immediately denied. Done. “Sorry, not today mean identity fraud man!”
How Do I Set Up a Credit Freeze?
Call each of the three bureaus and set it up (consider doing this for yourself too!) Or go online! It should take 10 minutes max per bureau to complete!
- Parents, legal guardians, or others with Power of Attorney can place a security freeze on the Equifax credit reports of minors under the age of 16.
- 888-EXPERIAN (888-397-3742)
- It simply states that you can do this for a minor.
- You can freeze the credit of your spouse or a minor 15 yrs and younger.
The main thing is that you keep the account credentials for each of the bureaus safe!
As freezes can only be taken down if you have the correct login, password and PIN info. It takes a good amount of jumping through hoops to get this info if you’ve lost it, which is a GOOD THING!
It takes about 30 minutes max to freeze your credit with the three bureaus. Remember, you can start & stop a credit freeze however many times you want, whenever you want, and it’s free!
Other Ways You Can Keep Their Personal Data Safe
There are a few more things that you can do as parents to help ensure their info stays safe.
- When filling out school or activity forms, ask why they need a SSN. Most don’t; it’s just part of the form, so people willingly fill it out.
- Never carry their (or your) Social Security card in your purse. Keep in a safe spot at home.
- Look at how companies use your info. You should be opting out of sharing any info with other companies (you usually need to uncheck a box on online forms or send an email).
Red flags to keep an eye out for:
- If your child starts getting mail addressed to them such as insurance offers, pre-approved credit card letters, etc.
- You or your child get robocalls using their name.
If you are concerned that your child’s info has been compromised, your best bet is to call the credit bureaus and ask to verify if they do have a credit record. Pull it and go over it carefully. If you find fraudulent activity, you need to immediately…
- Let the three bureaus know and lock down their record (and thus the ability to open new accounts)
- Contact the lender which the account was opened, and let them know to start fraud investigations
- File a police report
- File a fraud report with the FTC online or by calling 877-438-4338
You can get this all handled. It will take time and effort, but it is absolutely necessary!
2. Protecting Your Child’s Future by Establishing Good Credit History
Now I know this may seem a bit counterintuitive given on how I just told you to freeze their credit, but hear me out.
Starting “good” credit history is an important to-do list item when kids are in their teens. Why?
Well, those pesky college tuition loans are a pretty big reason!
Remember, the better your credit history, the better (lower) your loan rate will be. If your child has no credit history, they may only qualify for loan rates that aren’t that great, and end up paying tens of thousands more than they need to. Bummer.
Plus, if your teenager needs an apartment at college, then they must have good credit to get approved.
Or perhaps they want to get their first car by themselves (yaaaa for being independent).
Be thinking about putting your child on your credit cards as an authorized user when they turn 13 or so.
That way, they have plenty of time before they buy a car or secure a college loan to establish a good credit history.
Some companies have minimum age requirements to be an authorized user or a co-signer, and some don’t.
Call your credit card company to ask.
If you put your child on your card, this doesn’t mean that you need to give them the card.
You can just talk to them about it, and the reasons why you are doing it.
Teach them how to use credit responsibly and how this will help them in the long run. As the parent, you have full authority on who gets to use the card. If you feel that your teen isn’t ready, then hold off for a bit.
Differences Between an Authorized User & a Co-signer
Many people use these terms interchangeably but they are distinctly different, and it’s a very important difference!
Yet, for our example of building credit, they both do that same role.
- Authorized user – they can use the card legally. You are responsible for paying for their purchases, they are not responsible to pay for your purchases if you don’t pay. If you, as the primary cardholder don’t pay then both of your credit ratings will take a hit.
- Co-signer – they can use the card legally. You both are responsible for paying for the charges on the card. If neither of you pays, both of your credit ratings will take a hit.
Talk to your child about…
- How does having a good credit score help you
- The importance of not charging more on it that you can afford
- Common pitfalls of relying too much on credit cards
You don’t need to go too in-depth; they just need to understand the importance that they should place upon having good credit.
Word of caution: Before you do this, you need to make sure that your credit is at the good or even excellent level. Adding your child to your credit accounts does no good if your rating isn’t good.
Want to know more about the differences between credit locks, freezes, and fraud alerts? Check out Why You Should Absolutely Set Up a Credit Freeze, which goes through other small details and some safety action plans!
At the End of the Day
We, as Moms, naturally worry. Yet the best way to combat the “worry” is to take actionable steps to prevent what you are worried about.
Now, all worries may not have actionable steps. However, in the case of our child’s credit; protecting it with a freeze and establishing good credit early on, we can do a lot!
Now that we’ve got this worry out of the way we can go on to worry about other important things, like “WTH is stuck in my daughter’s hair and please don’t make me have to cut it out!