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How to keep your child's credit safe

Here's one more thing to worry about - identity thieves using your kid's information for fraud. Be vigilant now to prevent problems later.

By Smart Spending Editor Aug 29, 2013 4:46PM

This post comes from Susan Johnston of partner site U.S. News & World Report.

MSN Money PartnerAs kids head back to school, parents should be vigilant about guarding their children's personal information and watching for signs of potential identity theft. A child's credit history is a blank slate, and child identity theft can go undetected for years, making your son or daughter a desirable target of fraudsters.

Image: Boy in bed (© MM Productions/Jupiterimages)In fact, a 2011 Carnegie Mellon study found that 10% of more than 40,000 children's records studied had someone else using their Social Security number. The impact of child identity theft can take years to undo and can complicate a child's student loan or credit card application, employment status or ability to secure an apartment.

Thieves steal kids' identities through data breaches, dumpster diving or, in some cases, buying Social Security numbers from someone who has access to the information through their work. Once fraudsters have a child's Social Security number, they might use it to apply for credit or utilities, seek employment (in cases where someone may not be able to legally work in this country) or obtain medical care.

In some cases, the perpetrator is someone the child knows, perhaps even a family member. "A parent may use their child's Social Security number to obtain credit, thinking it's fairly innocuous," says Denis G. Kelly, author of "The Official Identity Theft Prevention Handbook" and president of, an identity theft prevention company. However, it's far from innocuous, and the companies defrauded can choose to take legal action against parents who do this.

To prevent child identity theft, take the same precautions you use to protect your own identity, both online and on paper. These include only giving out Social Security numbers when absolutely necessary and making sure companies and organizations take adequate steps to protect that information.

1. Ask how sensitive information will be protected

School administrators may have a legitimate need for a student's Social Security number, but a Little League coach or scout troop leader probably doesn't. "Parents should ask schools how the schools protect sensitive personal identifying information and how they destroy that personal information," says Ben Souede, an attorney at Angeli Law Group in Portland, Ore. The Family Educational Rights and Privacy Act covers how schools should handle students' information, including giving parents and students the right to inspect a student's educational record and deny permission to share that information to third parties.

2. Don't carry sensitive documents

Avoid carrying sensitive documents, yours or that of your children, in your wallet unless absolutely necessary. "Kids come with a whole lot of paperwork, and parents may not be as careful with what they do with that paperwork as they are with their own personally identifiable information," Souede says. "When you're going from school to the doctor's office, you might tend to travel with your kid's birth certificate and Social Security card."

3. Teach your kids online safety precautions

As your kids get older, make sure they take precautions in what they post online or share with others, especially with free online games that require players to input their address, date of birth or other information. "You're not going be around your children 24/7, so teach them safe online protocol," Kelly says. "Understand that they shouldn't be providing any information that they wouldn't tell a stranger. Once it's [online] it's permanent."

How do you know if your child's identity has been stolen?

Calls from collections agents, letters from the IRS or Social Security Administration, jury summons, traffic tickets or other suspicious mail can be indicators. If the IRS tells you the Social Security number you listed as a dependent is listed on another tax return, or if you try to set up a bank account for your child and the request is denied, those can also be signs. A credit card pre-approval offer is sometimes suspicious, but Velasquez points out older children may have college funds or savings accounts that put them on financial institutions' marketing lists. Still, it's worth calling to find out how the company got your child's information.

If you suspect someone is using your child's information for financial purposes, check your son or daughter's credit report. Children shouldn't have a credit report, but if they do, then you'll want to sort out any misinformation. First, contact the credit bureaus and ask them to put a fraud alert on your child's file. Next, file an ID Theft Affidavit with the Federal Trade Commission and a police report. Once you have those documents, you can contact the credit bureaus again and notify any banks or credit card issuers involved about the fraud.

Fixing identity theft can be a long, arduous process, but Souede says it's worth starting before your child turns 18 and wants to apply for student loans, get a job or find an apartment. "The longer it went on undetected, the harder it is to unwind," he says.

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