With the growing prevalence of technology in our daily lives, identity theft is becoming an increasingly more common occurrence. The Financial Consulate strongly recommends mitigating the risk of identity theft by utilizing the following recommendations:
- Check your credit report at Equifax, Experian, and TransUnion on an annual basis. You can obtain a free credit report once a year at annualcreditreport.com.
- Use two-factor authentication for your sensitive accounts. Two-factor authentication requires a user to first log onto a website (like your bank) to have the website then send a code to your cell phone, which you have to type in before the site will permit you access to your accounts.
- Set up notifications at financial institutions that alert you when changes are made to your account and when transactions occur.
- Consider the benefits of a security freeze.
This last bullet point—considering the benefits of a security freeze—is the focus of this article as it pertains to minors. If a criminal stole the identity of one of your children, imagine how long it would be before he or she was caught. Given that Social Security numbers are issued at birth, a criminal could use the identity of a child for many years without ever being detected. Some of you may be aware of how difficult it is to remove an error from your credit report, but unwinding 18 years of deliberate theft would be a nightmare.
We previously have recommended that you check your children’s credit report each year, just as you would check your own. Many would prefer that the credit reporting agency would simply inform you that no such report existed for your child; thus, you would know something was awry if a credit report was available.
Effective September 21, 2018, you will now be able to freeze your child’s credit report. This provides the same benefits as it would for an adult, namely that a bad actor cannot take out credit in your name, which is the primary means of cashing in on a stolen identity.
Freezing your children’s credit report also has the same serious downsides as it would have for an adult. You would need to remember all login and/or personal identification numbers (PINs) until your child either reaches the age of 18 years or starts applying for any sort of credit (e.g., student loans, apartment rentals, car insurance, cell phone service, etc.). I can assure you the freeze will be very burdensome to lift if you do not have available the correct login or PIN information.
Freezing your children’s credit report allows you to “claim” their files, thus significantly reducing the risk of their respective identities being stolen. Choosing not to freeze their reports is the digital equivalent of leaving the doors of your house unlocked.
To learn more about how to freeze your children’s credit reports, visit https://identitytheft.gov/Steps. As always, contact your advisor at the Financial Consulate with any questions about this process or about the serious issue of identity theft in general.