A few months ago, the personal finance world was rocked by this scandal: A six-year-old boy had been issued a credit card.
In this case, a mom had helped her son fill out the application when it arrived in the mail addressed to him. She wanted to see what would happen. Sadly, not all cases of children getting credit cards are so benign. This is because children are rapidly becoming targets of identity theft.
Using a child’s Social Security Number is so attractive to many ID thieves because most people do not think to check their children’s credit reports. I know I haven’t pulled my own son’s credit history. (Although I’m inclined to do so now.) All an ID thief has to do is get your child’s Social Security Number, and then apply online. They can make up a date of birth and put in whatever address they want. This is because there is very little age verification going on. And once that birth date is on the records of the first credit bureau — well, that’s considered the definitive age unless you file a dispute.
Bad credit can ruin your child’s future
Imagine how surprising and painful when you go to help your 17 or 18 year old apply for credit, only to find that it has already been destroyed by an ID thief. Generation X Finance points this out about the way identity theft works to ruin future credit:
Sure, most negative marks on your credit history drop off after 7 years, but keep in mind that criminals will use working methods for as long as possible, and may even sell the information to others who will go on and continue to use it in the future. So, your child’s credit history may be be getting ruined for years before it is ever detected.
You can see why it is important to not only keep track of your credit history, but to also periodically check up on your child’s credit history.