As a parent, you want your child to have a financially stable future with minimal hardship. While the responsibility for this is ultimately theirs, you can take various steps to prepare them for the future and give them a head start.
Playing a part in establishing your children’s credit profile from an early age is among the best things you can do to support them. This naturally leads parents to wonder—“how can I check my child’s credit report?”
Credit reporting for kids—particularly minors—isn’t the same as for adults. There are several important considerations to make here, and this guide will outline them to give you a full understanding of your child’s credit status.
How To Do a Credit Check for Children Over 18
If your child is of legal age—typically 18 years old, 19 in Alabama—they are considered an adult, and even though you are their parent, you have no legal right to check their credit report or credit score. However, you can coach your children and instruct them that it is a good financial practice to check their own credit scores and monitor their credit reports regularly for errors or irregularities.
Just like you, your adult children can check their credit scores using free online services, although a drawback to this approach is that most free scores are VantageScores® and not FICO® credit scores. VantageScores are popular educational scores, but most lenders use some variation of FICO scores for making credit decisions. VantageScores are typically directionally similar to FICO scores but can vary from them by dozens or even hundreds of points.
Your children can also obtain their credit reports for free from each of the three major consumer credit bureaus once every 12 months. Your children should make it a financial habit to review their credit reports once a year to check for accuracy and any information that doesn’t look like it belongs or might be a sign of identity theft or fraud.
If you’re checking a minor’s credit report, the process is a bit more complicated. To understand why, you need to learn how credit reporting for minors works.
How To Check a Minor’s Credit Report
If you want to check your child’s credit report, and they are a minor, you may need to contact one of the credit bureaus in charge (Experian, Equifax, and TransUnion) directly. Each bureau has a specific online form you can fill out to request the report. For instance, Experian’s form lets you make a direct inquiry.
Each Bureau will have a specific list of documents that are required to obtain your minor child’s credit report that help the bureau verify your identity and your relationship with your child. For instance, Experian’s requirements include:
- A copy of your driver’s license or another government-issued identification card, such as a state ID card
- Proof of your address, such as a copy of a bank statement, utility bill, or insurance statement
- A copy of your child’s birth certificate
- Proof of guardianship, if not named on the child’s birth certificate
- A copy of your child’s Social Security card
If you open the form, you’ll see it’s a part of Experian’s efforts to prevent child identity theft. Other bureaus take a similar approach, and there’s a good reason for that—a minor having a credit report can be a red flag.
While minors can build credit, their credit activity isn’t reported by the bureaus. Reporting is only activated once they become legal adults. According to Experian, there are only two cases in which a minor might have a credit report:
- They’re an authorized user of an adult’s credit card
- They’ve been a victim of identity theft
Adding a Minor as an Authorized User of Your Credit Card
Every parent wants the best for their child, and helping them build a strong credit profile early in life is an excellent way to support their future. Options for doing so are limited and mostly boil down to opening joint accounts or authorizing your child as a user of your credit card.
In either case, your child’s credit history will directly depend on yours. If you have a history of defaults or other credit issues, they’ll inherit them.
More importantly, not every bank reports authorized users and their credit activity to the credit bureaus. If your credit card issuer is among them, authorizing a child won’t help them build a credit profile.
One of the biggest issues of this approach is that once a child is removed as an authorized user, the credit history will be removed from their profile as well, and they’ll be back to square one.
Source: Kindel Media
Note that it’s crucial to check if your bank offers credit reporting for authorized users. If they don’t and your child still has a credit report, there’s a high chance someone has used their private information to forge a fake identity.
Child Identity Theft—A Rising Concern
If you haven’t authorized your child to use your credit card, it’s virtually impossible for them to have a credit report—the CARD act of 2009 made it difficult for anyone under 21 to own credit cards. In case a credit bureau still finds a report, it’s a sign they may have fallen victim to synthetic identity theft.
Children’s identities typically aren’t monitored, which is a major vulnerability exploited by fraudsters. Such criminals have gone beyond impersonating legitimate account holders and started stealing children’s information—most notably Social Security numbers (SSNs)—to forge new identities.
This practice is called synthetic identity fraud, and it’s a growing problem in the U.S. payment system.
The following comparison from the Federal Reserve’s whitepaper explains how synthetic identity fraud differs from traditional identity fraud:
Kids born after 2011 are at the highest risk of being victims of synthetic identity fraud because their SSNs are randomized. Before June 25, 2011, all SSNs were tied to a person’s birthdate and geolocation, which made them easier to verify. Randomization made it harder for the authorities or financial institutions to detect SSN misuse, enabling identity theft.
Helping Your Child Build a Strong Credit Profile
If your child meets the necessary conditions for having a valid credit report—they are of legal age and have a legitimate credit history—you need to ensure they receive proper financial education as it’s unlikely they’ll get it in high school.
It’s your job to teach them financial responsibility, help them develop healthy spending habits, and show them how to establish a solid credit profile.
In case your child has their own credit card or other financial products, make sure they understand the importance of:
- Timely repayments—This is the most influential factor in a person’s credit score. Make sure your child doesn’t miss credit payments by more than 29 days
- Credit usage—Borrowed money should never be used for excessive, unnecessary purchases. Help your child keep their credit utilization rate low by only using the funds when needed
- Long-term thinking—A single credit default and other mistakes can stay on your child’s report for around seven years, damaging their credit score. Thinking about the future can help them avoid impulsive decisions and maintain a good score
Source: Olexandr Pidvalnyi
As responsible as your child may be, a helping hand is always welcome when it comes to building a credit profile. If you want to ensure they start their credit-building journey the right way and keep close track of it, FreeKick can help.
FreeKick—Credit Building and Monitoring Done the Easy Way
FreeKick—powered by Austin Capital Bank—helps parents establish and build a strong credit profile for children ages 14 to 25. As a combination of a Federal Deposit Insurance Corporation (FDIC)-insured deposit account and additional services, FreeKick helps parents achieve two important goals for their children’s financial well-being and future:
- Automatically establish and build a strong credit profile for teens and young adults
- Monitor their credit profiles to detect signs of identity fraud
Credit Building for Teens and Young Adults
If you’re a parent looking to help your child build a strong credit profile and give them a financial head start in life, FreeKick can help you with a fast and simple process, with no ongoing actions required.
You can open a FreeKick account in just minutes:
- Bank Deposit—Make a one-time FDIC-insured deposit with a 12-month commitment
- Set It and Forget It—Choose a plan, and your child will automatically build credit for the next 12 months
- Keep Growing—Renew the account for another 12 months and keep building your child’s financial future
The last thing parents want is another monthly subscription, so FreeKick offers a FREE plan and two plans with smaller deposits and low annual fees:
|Plan||One-Time FDIC-Insured Deposit Amount|
Every time you renew your account, your child will build 12 additional months of payment and credit history, boosting their credit profile. Their credit profile will be monitored for another 12 months as well.
If your child is a legal adult (typically 18 and up), FreeKick automatically starts building their credit profile and reporting credit to the three major consumer credit bureaus once the account is open.
In case your child is a minor (14 to 17), FreeKick automatically starts building a payment and credit history for them. When they become a legal adult, they go through a simple process to activate credit reporting. Once that’s done, their account is reported to the major credit bureaus, and they start their adult life with up to 48 months of credit history, jumpstarting their personal credit profile and score.
Note that the credit bureaus only accept credit reporting for adults. This means that, while you can cancel your FreeKick account at any time without any penalties, no credit reporting can be done if your child is a minor at the time.
Credit Profile Monitoring
As mentioned before, identity theft is a major problem affecting minors, and it can have severe consequences. That’s why FreeKick offers comprehensive credit monitoring, helping parents detect fraudulent activity and ensure their children’s personal information isn’t misused.
If you want to support your child’s future while keeping an eye on their credit profile and identity, open a FreeKick account.
Featured image source: rupixen.com