They’re tempting victims; federal law increases access to credit reports
By Karen Haywood Queen for www.creditcards.com
Every year, some of the 26,000 American youth who age out of foster care have to not only start out on their own with no support system, they have to do so while trying to clear up credit problems caused by identity theft and errors. Those problems make it harder to land a job, get an apartment or car, and secure college loans and other types of credit.
Some help is on the way. Thanks to a federal law passed in 2011 — the Child and Family Services Improvement and Innovation Act — when foster children turn 16, child welfare agencies must assist them in getting annual credit reports and clearing up any mistakes. State community welfare agencies have been working with credit reporting agencies and are putting systems in place to do just that.
They have their hands full. Children are a favorite target among identity thieves and the crime often goes undetected until they’re grown up and applying for credit or a job.
Foster kids have it even tougher. “Young people in foster care are particularly vulnerable to identity theft,” says Jennifer Miller, partner at the nonprofit organization Child Focus and co-author of a 2013 report from the Annie E. Casey Foundation on protecting the credit of youth in foster care. “They may move frequently between foster homes, group homes and relatives, and their Social Security numbers are accessible in each of these placements. For some young people, the identity theft occurs even before they enter the system…”
Maryland provides a good example. In 2012, the state instituted the country’s first law to allow parents and guardians to freeze the credit reports of minors in their care. This would keep fraudsters from opening an account in the child’s name. If the youth does not have a credit record (and they shouldn’t, since a child under 18 is not legally allowed to enter into a contract that would require credit), the parent or guardian can request that the credit reporting agency create a record that prohibits the agency from releasing information about the child to potential creditors.
An even more comprehensive Maryland law takes effect in October that freezes the credit of children after they enter foster care. At age 18, the foster child will be provided information on how to unfreeze the account.
Prevention is just the first step. The law also requires foster care agencies to act to resolve any issues in the child’s credit report. The credit reporting bureaus have been working with Maryland and other states to make pulling records and resolving problems easier.
For instance, traditionally if a parent or guardian wanted to access a minor’s credit record, they would have to write a letter to each credit bureau and send it by post. New electronic systems will allow child welfare agencies to access the records of foster children in large batches.
The eventual goal is to be able to sort issues by creditors and remediate any problems in batches, too, says Robin McKinney, director of the Maryland CASH Campaign, a nonprofit network of organizations promoting financial stability for working families. If, say, 50 kids have had utility accounts opened in their names, the Department of Social Services could work with the utility company to clear up all 50 accounts at once, she says.
The final piece is getting foster children ready to handle money and credit on their own as adults. A Maryland Department of Human Resources initiative, Ready By 21, works to connect youth with the financial resources, education and coaching they need to be ready to make good financial decisions when they age out of foster care (in Maryland, that happens at age 21), according to McKinney. “We want the ability to build credit to be in the hands of these youth,” she says.
Read more: http://www.creditcards.com/credit-card-news/foster_children-id_theft-1270.php#ixzz2g7dCPzCu