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Question: How do I protect my kid's credit?

My husband and I are both very cautious when it comes to finances. We've both frozen our credit files in order to prevent someone from opening up a credit card or taking out a loan in our names if our information was ever stolen. Now we have a 2 year old, and ever since she was issued her social security number (practically the day after she was born), I've been wondering how we can protect her from becoming a victim of identify theft. I tried freezing her credit files as well, but the companies said she had to be 18. One company said they don't knowingly maintain credit files on people under the age of 13, but that if we suspect someone is using her identity we can request a credit report. But how would I know to be suspicious? What suggestions do you have to help protect her? Or am I being too paranoid?

Response:

Have either of you been victims of ID theft before?  I ask because you seem really focused on it.  I mean, really!

You have many more things to worry about even when it comes to your kid's finances, such as building up your retirement as parents so your kids won't have to take care of you in your old age and then saving some for college.  Credit files won't be maintained for quite a while.  However, you can keep an eye out for offers in the mail that comes in your child's name that are not related to being a baby--such as magazine subscriptions and catalogues.  That hints that someone is using her name and identity.  Should you or anyone in your family find items that aren't yours on your credit reports, follow a step-by-step process here from the Federal Trade Commission.  

And there is one unfortunate side-effect of freezing your credit--it can be hard to unfreeze it if and when you need it to take out a loan or buy a new home or get a new credit card.  Rather than freezing your credit, I recommend that you do a bi-weekly review of your credit card statements online so you can catch any errors or fraud.  Also, get your credit reports for free once a year at www.AnnualCreditReport.com and review for any errors or fraud.  Keeping an eye on your credit takes a bit of time but it may be less costly in both time and effort than a credit freeze.  Meanwhile, enjoy the little one!  She's an original.  

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