When Should You Check Your Child’s Credit Report?

When will your child have a credit report? When should you check? When should you be worried that your child does have a credit report or his or her credit is being used illegally? These are all questions that parents should ask themselves but often do not.

Typically children do not have a credit report until they actually obtain their first credit card, car loan or other financial account that is reported to the credit bureaus. This should not be until they reach the age of majority in your state and can legally enter into contracts. Or possibly when you add them as an authorized user on your credit cards, not that I am advising that you do that!

However, children are often the victim of identity theft long before they are old enough to obtain their own credit. Oftentimes, it is the children’s own parents that are the identity thieves. A credit application appears one day bearing the child’s name. A quick application later and a credit card is issued in the child’s name. An unscrupulous parent can then make charges that never are re-paid and that do not affect the parent’s credit report.

And it does not have to be a parent that commits the crime. Children can be the victims of identity thieves that are complete strangers. Or they can be “merged” with another adult consumer whose name, Social Security number or other personal identifiers are similar to your child’s. While the credit bureaus should never allow this to happen by simply complying with the Fair Credit Reporting Act, it does happen because the credit bureaus are known to utilize faulty matching logic that allows such mergers of credit files to happen. And when it does, the adult consumer’s credit can and will land on your child’s credit report, which can cause your child to be saddled with a bad credit history before he or she even begins their adult life.

So how do you protect your child’s credit? What are the warning signs that a child has become the victim of identity theft?

You should check your child’s credit report with the big three credit bureaus (Experian, Equifax and Trans Union). I suggest doing so when your child turns 16. At that point, the response from the credit bureaus should be that they have no file on your child. But, if there is a file, then you should obtain a copy (as the parent and guardian of your child) and confirm that no accounts have been opened in your child’s name. If there have been, dispute them to the credit bureaus, including a copy of your child’s birth certificate to prove that he or she is under age and thus not legally capable of entering into a contract to open the fraudulently opened account(s).

Should you ever check your child’s credit before their sixteenth birthday? Yes – if your child starts receiving credit card applications, collection letters, collection calls or anything indicating that they have been active in the credit arena. This could be an indication that your child’s identity has already been stolen. At that point, despite your child’s age, you should check his or her credit report and dispute anything that is not your child’s credit.

Ideally, such disputes will lead to the child’s credit reports being corrected. But, as often is the case, the credit bureaus will not perform reasonable investigations of the disputes. At that point, you should consult an attorney like me who specializes in Fair Credit Reporting Act litigation.

Ten Things the Credit Bureaus Won’t Say

Kudos to AnnaMaria Andriotis at MarketWatch.com for penning a very detailed, in depth article about ten things the Credit Bureaus won’t say. I have taken her ten items (in quotes below) and added my thoughts for each one. I even added an eleventh thing you won’t hear the Credit Bureaus dare say.

Ms. Andriotis’ ten things include:

1. “We track a lot more than just your credit.” What else do the credit bureaus track? Pretty much anything they can. Like how often you change addresses, your income, your neighbors’ income, your city’s average credit score, how often you change jobs.

2. “Selling your secrets is how we make our money.” That’s right. We are not their customers. We are the credit bureaus’ inventory. And they get that inventory virtually for free (and sometimes even paid to receive it). Our creditors provide our payment history to the credit bureaus, sometimes paying a fee to do so. The credit bureaus then turn around, compile the information provided by thousands of creditors into your credit report, then sell it to you and to your potential creditors. If they assign the oh so magical “credit score” to your report, you pay even more just to have this number (which is not even uniform among the credit bureaus, creditors, or any one else). Craziness. Even crazier … the credit bureau industry raked in about $4 billion in 2011 selling you to your potential creditors. Bet you did not see a dime of what your information was sold for.

3. “What we know could cost you a new job.” That’s right. Your credit report is not just used to determine your credit eligibility. Its also used by many employers (roughly 47%) during the hiring process. That often leads to a catch 22 type situation that I have talked about before, where you can’t pay your bills because you are unemployed but no one will hire you because your credit score dropped when you didn’t pay your bills. Again I say … craziness.

4. “Good thing no one’s reporting on our mistakes. Oh, wait.” That’s right, the credit bureaus sure wish there was no one paying attention to their accuracy level, or lack thereof. But watchdog organizations and even governmental entities are watching and keeping track. US PIRG releases a report on the credit bureaus every few years. And, recently, the Federal Trade Commission issued a very damning report that showed that one in five (20%) of consumers had at least one error on one of their credit reports. 13% had errors serious enough to effect their credit score (i.e. making their interest rates go up or their credit limits lessen) and 5% had errors so bad that the errors would cause them to be denied credit in their entirety. 5% may not sound like a big number but that equates to about 10 million consumers. Crazy scary.

The Fair Credit Reporting Act requires the credit bureaus to follow reasonable procedures to assure maximum possible accuracy of the credit reports they create (and profit off of). Obviously, a 20% error rate is not “maximum possible accuracy” or anything close. Add that to an investigation procedure that does not come close to cutting it, and you have a recipe for a disaster for hardworking consumers.

5. “You all look so much alike…” This one hits on the faulty matching logic used by the credit bureaus. When the credit bureaus generate credit reports about you, they use the personal identifying information inputted by the entity seeking your credit report to match you to your accounts. At least that’s how its supposed to work. But the credit bureaus do not require an exact match of your identifiers to the identifiers on an account before putting that account on your report and publishing it as your history, good bad or ugly. This leads to what us consumer lawyers call mixed files.

I once represented a man whose brother had bad credit. They shared the same last name (most brothers do). Their first names started with the same first initial (again, a lot of parents name their kids like that). Seven out of nine numbers of their SSN match, but that’s not uncommon. If they got their SSNs in the same state and at the same time, its very likely the first five numbers match, since (back then) the first three numbers identified the state where the SSN was obtained and the middle two numbers indicate the grouping of SSNs. So if their parents got their SSNs at the same time (again, not uncommon), the first five numbers are very likely to match. The two brothers in my case also shared the same address at one point in time (about 10 years before, again not uncommon for brothers to at one point live at the same address). And their dates of birth were within ten years of each other, again not unusual for brothers. So the only personal identifier that match was the brothers’ last name. But that was enough for one of the credit bureaus to merge their credit histories together, ruining my client’s stellar credit with his deadbeat brother’s terrible credit history. And, even worse, the credit bureau refused to fix the problem, despite years of dispute from my client, until he finally hired me and we sued. Crazy crazy.

6. “… its tough to tell you apart from someone pretending to be you.” Ahhhh, identity theft. The reason I got into this area of law to begin with. While its often the fraudulent credit grantors that are to blame for the problems caused by identity theft, the blame also rests with the credit bureaus. What the credit bureaus want to ignore is the Fair Credit Reporting Act’s requirement that they perform reasonable investigations of disputes lodged with them. They want to pretend that only the furnisher of the disputed information has such a duty (the furnisher does have such a duty, but its in addition to the credit bureaus’ duty to investigate). So all the credit bureaus do to “investigate” is forward your dispute to the furnisher of the erroneous data and then … wait for it … the credit bureaus believe whatever the furnisher tells them, no matter what proof you have provided of your innocence. Unlike in baseball, where “a tie goes to the runner”, in the credit bureau’s world, you are out no matter how much you beat the throw, simply because the umpire says you are. And the umpire gets paid if he calls you out. Twice as crazy as crazy crazy.

7. “Your ‘credit dispute’ doesn’t quite capture our attention.” This ties into number 6. The Fair Credit Reporting Act requires the credit bureaus to forward all relevant information provided to them by the disputing consumer to the furnisher of the information being disputed. But what’s nuts (I’ve run out of ways to say crazy)? The credit bureaus do not even have a system in place that allows them to forward any documentation or other proof from consumers to the furnishers. All they provide is a two digit code that is translated on the furnisher’s end to a basic dispute like “identity theft” or “not mine” or “never late”. So send proof that you were never late, including bank statements and cancelled checks. But don’t expect your proof to make it to that umpire waiting to get paid by calling you out.

8. “But bypass us on a dispute, and it’ll cost you.” This is one of the main weaknesses of the Fair Credit Reporting Act. There is no liability on the part of the credit bureaus or the furnishers of erroneous information if you do what most think is natural – dispute directly to the furnisher. For the duties to perform reasonable investigations under the FCRA to be triggered, the dispute must be made to the credit bureau, even though all they are going to do is pass the buck on to the furnisher. Many consumers do not know this and end up with no claim because they went straight to the furnisher instead of disputing to the credit bureaus.

But disputes to furnishers are important. See number 6 and 7. Because the credit bureaus do not pass on your proof to the furnishers and do a lack luster job translating your two page dispute letter to a two digit dispute code, sometimes it is up to you to let the furnisher know what your dispute really is. And disputing to the furnisher in addition to the credit bureaus eliminates a common defense I see from the furnishers where they claim ignorance as to a consumer’s dispute because they did not know what the credit bureaus meant by their two digit dispute code. So, all you consumers out there, be sure to lodge your disputes with both the credit bureaus (to trigger the FCRA) and with the furnishers (so they can’t avoid the FCRA by claiming ignorance).

9. “By the time you’re done fighting us, your toddler could be a teen.” This one I don’t necessarily agree with but only because the author of the Marketwatch.com article did not mention that you can stop the errors in most cases by suing the credit bureaus and/or furnishers. So, consumers, dispute the errors. Dispute them often. Give the credit bureaus and the furnishers multiple opportunities to do the right thing and fix their errors. And, if and when they don’t, hire a consumer lawyer like me and sue the bureaus and furnishers for all the heart ache their refusal to follow the law caused.

10. “Be careful what you pay for.” I’ve blogged on this topic multiple times at my blog located at www.fcralawyer.blogspot.com. The credit score that the credit bureaus so eagerly want to sell you is not even a score that is used by your potential creditors in most instances. It can be enlightening to see what your score is, but that’s about it. Creditor use different scoring models than what the credit bureaus sell. The most common used score is the FICO score which consumers can buy, but not from the credit bureaus. To see your FICO score, go to http://www.myfico.com.

All in all, a very informative and well researched and written article about the true story of the credit bureaus. But I will add a number 11 of my own:

11. “We spend top dollar to investigate your disputes.” Not only do they not pay top dollar, the credit bureaus do not even pay minimum wage to its investigators. Your disputes are being handled by outsourced investigators in such places as Chile, Jamaica and the Philippines, where the credit bureaus do not even have to pay minimum wage. And they work their third world work force by placing quotas on how many investigations they perform a day. One such credit bureau expected its investigators to perform an investigation every two minutes. That’s simply not enough time to “reasonably” investigate anything. Craziness to the nth degree.

Please read the full article at http://www.marketwatch.com/story/10-things-credit-bureaus-wont-say-2013-02-15. Again, the article is very well written and a must read.

Your Rights Under the Fair Credit Reporting Act

We sue credit bureaus for violating the Fair Credit Reporting Act. But what rights does the Fair Credit Reporting Act give you as a consumer?

First, you have the right to obtain one free credit report each year from each of the national consumer reporting agencies (i.e. Experian, Equifax and Trans Union). You can obtain your free annual reports by going to www.annualcreditreport.com or by using the form found on the Fair Credit Reporting Act page of the Kittell Law Firm website. You are also entitled to a free credit report when you are denied credit, employment or insurance based upon the contents of a credit report. In that instance, you can request a free credit report from whichever consumer reporting agency whose report was used in the decision to deny your application for credit, insurance or employment.

I recommend obtaining your free credit reports once a year and reviewing your credit reports for any errors. That brings up your second right under the Fair Credit Reporting Act which, to me, is the most important of the rights bestowed by the Fair Credit Reporting Act.

You have the right to have any errors on your credit report corrected or deleted. Credit reporting errors can take many different forms. Some credit reporting errors are simple to have corrected – like misspellings of your name or errors in your address. Other credit reporting errors take more effort to get corrected – like incorrect balances and erroneous late payments. Some credit reporting errors are much more difficult and often times require litigation to correct – such as fraudulently opened accounts by identity thieves or when the accounts of another person with a similar name or Social Security number appear on your credit reports.

You are allowed to dispute any errors you find on your credit reports to the credit bureaus reporting the errors via mail, phone or through the credit bureaus’ websites or even third party websites like creditkarma.com. However, I strongly urge you to dispute any errors by writing a letter to the credit bureaus rather than making the disputes by phone or their website. If you dispute the error by phone, it will be your word against the credit bureaus’ records as to what was actually said during the phone call. If you dispute via the credit bureaus’ websites, you are limited to the vague, generic choices for your dispute (i.e. not my account) which may not completely reflect the nature of your dispute. So taking the time to write and mail a letter is the best way to lodge your disputes. The mailing addresses for Experian, Equifax and Trans Union can be found on the Kittell Law Firm’s Fair Credit Reporting Act page.

If possible, include any documentation or other proof that proves the error is incorrect with your disputes to the credit bureaus. And don’t think that, once disputed, the error is corrected. The credit bureaus are notorious for failing to properly investigate the disputes they receive, which often causes the errors to remain on consumers’ credit reports. Sometimes multiple disputes are required to obtain a corrected credit report. Often, it takes suing Experian, Equifax and/or Trans Union to sufficiently get their attention to have an error corrected.

Once you dispute the error, the credit bureau must do two things. First, it must perform a reasonable investigation of your dispute. Second, it must relay your dispute to the entity which furnished the disputed information to the credit bureau. So, if you believe your Capital One credit card is reporting late payments that are incorrect on your Equifax credit report, and you tell Equifax that your Capital One payments were never late, Equifax must perform its own reasonable investigation of your dispute AND forward your dispute to Capital One to perform its own investigation. Once the investigations are complete, the credit bureau should correct your credit report. But, unfortunately for many consumers, the credit bureaus often do not perform reasonable investigations. The credit bureaus outsource the investigations of most of the disputes they receive to foreign countries who may or may not completely understand even what is being disputed. And, most of the time, the credit bureaus just rely on the furnisher to do its investigation which, since the furnisher is the source of the inaccuracy, often times results in errors remaining on consumers’ credit reports.

The Fair Credit Reporting Act gives consumers the right to sue the credit bureaus (and the furnishers) for failing to properly investigate their disputes. If the consumer can prove that the credit bureau negligently violated the requirement to reasonably investigate the consumer’s dispute, the consumer can be awarded his or her actual damages, attorney’s fees and costs. If the violation is shown to be willful (i.e. performed intentionally or in reckless disregard for the requirements of the Fair Credit Reporting Act), the consumer can also receive a punitive damage award against the credit bureaus and/or furnishers.

But do not represent yourself in such a lawsuit. The Fair Credit Reporting Act is a complicated set of statutes with many parts. For instance, the requirement of the credit bureau to investigate is found in the “I” section of the act and the requirement of the furnisher to investigate is found in the “S” section. And many of the sections in between have loopholes or landmines that can destroy your case if you do not know what you are doing. And there are literally thousands of Fair Credit Reporting Act case opinions that further define and interpret the requirements of the FCRA. Most attorneys do not even know the ins and outs of the Fair Credit Reporting Act so representing yourself is fraught with danger.

The Kittell Law Firm is willing to represent consumers under the FCRA in all fifty states. So, if you have errors on your credit reports which the credit bureaus refuse to fix, contact the Kittell Law Firm for a free consultation.

Both children and parents need to be protected from identity theft!

While perusing various articles about identity theft and other consumer issues this weekend, it became clear that age, whether young or old, does not protect consumers from being the victims of identity theft. One article I read was about how more than 1 million children had their identity stolen in 2017. ONE MILLION CHILDREN in just one year. Let that sink in for a minute.

Then another article I read was about how the oldest World War II veteran had his identity stolen recently. Richard Overton is a 112 year old veteran living in Austin, Texas. He requires around the clock medical care and, obviously, is not out making a lot of charges. But scammers stole his identity and his banking information, allowing them to make multiple withdrawals from his banking account.

Thus, consumers do not just need to protect their own identities and financial information. They also need to help protect the identities of their children and elderly parents/grandparents. How do you do this? Well, you can’t go checking your family members’ credit reports looking for fraud, since to access someone else’s credit report without their permission violates the Fair Credit Reporting Act, among other laws. But you can help your elderly parents and your minor children request and check their own credit reports. Help your elderly family members balance their bank statements and thereby watch for fraud.

Teach both your children and your parents NOT to give out their personal information to anyone that calls them and be hesitant to even give it out to people they call of not absolutely necessary for whatever they are trying to do. Scammers are notorious for pretending to be Medicare employees and tricking older Americans into giving out their Social Security Number and banking information. Minors often do not realize the potential consequences of sharing too much information, particularly online. So teach your children and parents not to give out their information!

Make sure your parents understand and know how to spot the basic internet scams, like phishing e-mails. Teach them that just because an e-mail looks like it comes from a trusted source, be careful if it asks them to log in or give out financial information. Let them know that anything originating from Nigeria is likely a scam and that no complete stranger died and left them millions.

Identity theft affects all ages. So we must do our best to educate and protect the most vulnerable amongst us. The identity thieves will not let their vulnerability stop them from becoming their next victims. So protect your kids and your parents from identity theft.