When foster parents assume the care of minor children, they take on the financial responsibility to protect them from threats such as identity theft and credit fraud. While Connecticut, California and Colorado have enacted laws that enable child welfare workers to check the credit reports and scores of foster children, in many areas, these parents will need to take extra steps to achieve credit protection for their kids.
This task can be important to the long-term financial independence of these children, as some exit state custody as adults only to find that they have inherited outstanding credit card bills and will need to pay more in interest to borrow the money they need to start life anew. To combat this problem, foster parents may want to familiarize themselves with misconceptions about the credit reporting process.
Credit reporting agencies typically don’t verify age
Since the Equal Credit Opportunity Act protects consumers from discrimination based on age, many credit reporting agencies don’t evaluate this factor when screening new applicants. As a result, credit thieves are able to use the financial information of foster children to submit telephone and online applications — avenues that are typically not given close scrutiny as long as the person provides proof of identity.
Adding to this problem is the fact that many workers at credit reporting agencies aren’t trained to adequately spot counterfeit driver’s licenses or other essential documents.
Applications from minors aren’t assumed to be fraudulent
Credit reporting agencies keep track of the age of their applicants by using the data they receive on submissions. As such, they typically don’t consult government entities that could help spot the misuse of a Social Security number, such as the Social Security Administration.
Helping a child fight identity theft
To ensure their new adopted child is protected against this financial threat, parents should encourage their kids to examine their credit report annually. In many states, minors can get assistance from foster care coordinators who can provide the child with information, tips and brochures.
The number of states that offer enhanced protection for this group of Americans is also growing. For instance, legislation is currently being drafted in Rhode Island that would mirror the protections offered in other states. Regardless, government agencies advise parents to take simple steps such as shredding any financial documents like insurance forms and bank statements that may bear their child’s information.