In 2011, more than 19,000 child identity theft complaints were reported to the Federal Trade Commission, compared with approximately 6,000 complaints in 2003.

Children are at risk because they are essentially blank slates in the credit world. Identity theft scammers have caught on to this opportunity and are taking advantage by stealing children’s identities and selling them on the open market.

Child identity theft most often occurs when someone gets a hold of a Social Security number or other personal information for a minor and uses it to apply for credit, apply for a job, get a driver’s license, tap into a family’s medical health insurance benefits, or even apply for government benefits.

Sometimes the identity thieves are professional criminals, but often, the thief can be a close relative or friend with access to sensitive personal information. A family member may take a child’s Social Security number and open up credit accounts or set up utilities.

The family member who pilfers a child’s identity might not realize the extent of the possible long-term damage, but if they don’t pay their bills or rack up debt or have a history of late payments, that negative information is entered on the child’s credit file and stays there. Child identity theft can go unchecked for years. Often the first sign of child identity theft is revealed when the child becomes an adult and is turned down for their first apartment, or is rejected for their first credit card.

Children are supposed to have a completely blank credit file. Parents have the responsibility to protect their children’s personal information. If parents are informed and aware of how to protect this information, they have a much greater chance of protecting against and preventing child identity theft.

In a Child Identity Theft study recently commissioned by Equifax, research firm Vantedge found that more than 80 percent of parents with minor children are still largely unaware of the threat of the child identity theft.

Younger parents are more tuned into the dangers of identity theft. Almost 50 percent of the survey respondents who were “extremely familiar” with child identity theft were between ages 25 and 34, and 87 percent of those have children are 10 or younger.

The group of survey respondents most familiar with child identity theft also recognizes the danger. “Extremely familiar” parents were two times more likely to rate their level of concern as a nine or 10 on a scale of one to 10.

The extremely familiar respondents were also ones with a close personal connection to child identity theft. Thirteen percent of total survey respondents have a friend or family member who is the parent of a victim of child identity theft, and 11 percent have a friend or family member who is a victim of child identity theft.

Clearly, it’s time to spread awareness and education about child identity theft. The numbers of children whose identities are stolen grows every year. But by educating parents to take steps to help prevent child identity theft, we can begin to stem the rising tide of this problem. Don’t wait until your child or family becomes a victim of identity theft to start looking for the warning signs.

Equifax is committed to arming parents with the tools you need to help protect your own identities and the identities of your children.

We recently launched Equifax Complete Family Plan as a product to educate parents and help guard against the threat of identity theft. It offers families the most comprehensive identity protection and credit monitoring features available from Equifax for two adults and up to four minor children.

Please continue to return to the Finance Blog and Equifax.com for more resources and education on child identity theft.

Have you or someone in your family been a victim of child identity theft? Share your story in the comments below.

Warning signs of identity theft

Without an existing credit report or financial identity, the first red flags for identity theft could be odd mail. Your child may receive pre-approval for credit or a credit application—things someone with no credit activity shouldn’t be receiving—or collection notices or a Social Security earnings statement. Another red flag might be raised if you go to open your young child’s first savings account only to find that there’s already an account on file. Marietta Jelks of the Office of Citizen Services and Innovative Technologies says she’s even heard of teenagers who can’t get a driver’s license because someone is already using their Social Security number.

Who do you need to notify?

First, contact the Federal Trade Commission (FTC). Child identity theft is one of the agency’s biggest priorities, and while the FTC can help you with your individual situation, your case might also help prevent future identity theft.

You should also go to the police. Bring as much information as possible when you file your police report. Take credit reports, bills, collection notices, and anything else you have to make the case that your child’s identity has been stolen.

If you can figure out where your identity thief has opened accounts, contact the fraud department at these corporations. This is where your police report will come in handy. Companies won’t close accounts just because you say so; you’ll have to provide proof that these accounts are fraudulent.

How to check your child’s credit report

With a copy of your police report, you can now request a copy of any information on file by the three credit reporting agencies. The request will need to be in writing.

Once you have your credit reports, you’ll want to contact any credit issuers or collection agencies listed on the credit report or who have been in contact with you. Give them copies of the police report and the credit report. Explain that this is a case of child identity theft and that the contract is not binding due to the age of the child at the time the contract was written.

Ask to have all accounts, application inquiries, and collection notices removed immediately from your child’s credit report. You can do this via the credit issuer or through a dispute process with the credit reporting agencies. In the end, the credit issuer is the final decision maker as to whether to accept the claim of fraud or not.

Request copies of all application and transaction records. According to federal law, credit issuers and collection agencies must make those documents available to the victim/parent when a police report has been submitted with the written request. Make copies and provide them to the police investigating the case. These documents may help you discover how this crime occurred.

If you’ve been through this process before, you know how painful and arduous it can be. Instead of trying to recover your child’s credit report and personal information after identity theft, you can help prevent the theft from happening. With the new Equifax Complete Family Plan, a blank credit file is created using your child’s Social Security number, and that account is locked until he or she turns 18. No one will be able access his or her personal information or credit file unless you give permission, giving you the peace of mind that your child’s credit history will be safe for years to come.

Children are at risk because they have a clean slate. They have no credit history or debts, and that makes them an attractive target to identity thieves and scam artists. People are looking to rebuild their life with a fresh start, and a child’s clean credit report may provide them with that new (albeit fraudulent) beginning.

In 2011, more than 19,000 child identity theft complaints were reported to the Federal Trade Commission, compared with about 6,000 cases in 2003. And, a 2011 Carnegie Mellon CyLab study on child identity theft looked at identity scans of 40,000 children and found that 10.2 percent had had someone else use their Social Security numbers.

Some perpetrators of child identity theft are friends and family members looking to get around their own bad credit ratings. According to the CyLab report, other primary causes of identity theft can be traced to illegal immigration (to obtain false ID for employment) and organized crime and financial fraud.

Criminals will search for Social Security numbers and run checks to see if the numbers have been used to obtain credit. When they find an unused number, they’ve hit the jackpot. Such numbers—and other personal information—can then be sold for hundreds or even thousands of dollars.

Even if you think your child’s Social Security card is protected in your safety deposit box, you might be surprised at the activities that can place his or her personal identification at risk.

According to Marietta Jelks, consumer action handbook manager for the Office of Citizen Services and Innovative Technologies, children are online more, and they don’t understand the consequences of certain actions. “They’re giving out private information like their phone number or address, and [they] don’t think about the negative implications. They’re not reading privacy statements,” says Jelks.

You trust your children’s doctor’s office and school with their health and safety, but you don’t know what such agencies are doing with your family’s personal information. If you submit a form when you see the doctor or sign your child up for an extracurricular activity, you don’t know who is seeing the information and how it’s kept or destroyed. Jelks also says that parents are placing their children at greater risk when they carry around children’s Social Security cards without keeping track of the materials.

What kind of personal information could put your child at risk for identity theft?

• Social Security number
• Date of birth/location of birth
• Address and phone number (present and prior)
• Student ID number (often easily traced back to a Social Security number)
• Email address
• Medical ID number
• Health insurance ID number
• Bank account numbers

As your children become teenagers and may have jobs, bank accounts, and email addresses, educate them on the importance of protecting their personal information. While your children are growing up and finding their identity, help them out and make sure to protect their credit and financial identity.

How can you protect your family and children from identity theft?

You can lock up all your paperwork and request that everyone in your life shred every piece of paper with your name on it, but sometimes identity thieves will still find a way to slip through the cracks.

Maryland is considering legislation to become the first state with a law to protect a child’s credit report. This law would allow parents or guardians to create a credit file for a child and immediately freeze it. If the credit report attached to your child’s Social Security number is frozen, an identity thief can’t open credit under your child’s name.

Until more states consider legislation to protect children in this way, you can take action for yourself. The new Equifax Complete™ Family Plan helps families protect themselves from the growing problem of child identity theft.

If you currently protect yourself with the Equifax Complete Premier Plan, you’ll be familiar with the offerings available to you:

• Monitoring of your credit files with the three credit reporting agencies with alerts of key changes to your credit report sent within 24 hours.
• Monitoring of your Equifax Credit Score and notification of changes to it.
• Access to credit scores from Equifax, Experian, and TransUnion.
• Internet scanning of your personal information.
• Lost wallet assistance and fraud resolution specialists.
• Identity theft insurance.

The new Equifax Complete™ Family Plan includes all the above features, but it’s not just for your personal use. You can now add one adults and up to four minor children to this plan.

Have you or your children been victims of identity theft? Over the next few weeks, we’ll cover what to do if you’ve become a victim and ways to protect yourself at the doctor’s office and at tax time. Please leave your questions and comments below.

Your credit report contains a story about what kind of debt you’ve taken on and how you’ve paid it back. You might think of the $20 you borrowed from a coworker to pay for lunch as a debt, and it is, except most creditors and credit-reporting agencies aren’t going to keep track of that.

Credit reporting agencies keep a file on you containing all your credit accounts and payment histories that have been reported to them by your creditors, lenders and public records.

Your credit file can contain up to four different types of accounts or categories of debt:

• Mortgage or home equity loan.
• Installment debt. This could be an auto loan or a student loan-a debt you pay the same amount toward every month.
• Revolving debt. Credit card accounts would typically fall into this category.
• Other types of debts. Accounts in which the entire balance is due upon demand or that have one payment due as scheduled. These could be credit card accounts in which the full balance amount is due each month, or accounts from collection agencies, child support agencies, utility companies, or student loan guarantors.

What Is Good Debt?

Some types of accounts reflect more positively on your credit report because of what they can reveal about your financial habits.

Sometimes you may need to take on debt as an investment in the future. A student loan is usually considered good debt. That home equity line to build another bedroom may be a better investment than running up your credit card debt to pay for nice dinners and extravagant vacations.

Overall, any debt can be considered good debt if you are able to pay it back on time each month, making at least the minimum payment due.

What Is Bad Debt?

Any debt can turn into a bad debt if you overextend yourself or get behind in your payments. The key is to apply for credit only when necessary and to use your available credit wisely. Essentially, bad debts are those you can’t pay on time or that use up too much of your available credit.

Let’s look at a car loan. Say you need to buy a car to be able to get to work. Are you going to take out a loan for $15,000 because you know that monthly payment will fit in your budget? Or are you going to take out a loan for $50,000 and overextend yourself for that high-end automotive experience?

Overall, bad debt is debt that is incurred to fund a lifestyle that you cannot afford. Sacrificing your long-term financial health for short-term gratification is not a wise use of debt.

Turning Your Bad Debt into Good Debt

It’s easy to say, “Pay down your credit card and make your monthly payment on time,” but we hear all too often from consumers that it can be very tough to get credit accounts under control.

The first step to any effort to improve your credit-worthiness is to stop incurring new debt. Then you’ll want to take action to improve your credit behavior.

When thinking about “good debt” versus “bad debt,” it’s more about how you use the credit you’ve been extended. You want to show that you’re using your credit responsibly.

Good debt can mean that you have a mix of credit accounts and you’ve established a history of paying back your debts as agreed. By paying down your debt steadily over time, it shows that you made a decision to finance a purchase and you’re managing the responsibility to repay the debt.

Paying Down Your Debt

Our research shows that paying down debt makes people feel good. But sometimes consumers need a little assistance and a little extra motivation.

Equifax’s Debt Wise product^TM, helps you figure out how to pay down your bills and get out of debt faster. Debt Wise takes those basic principles and applies “debt stacking” to figure out which debts you should pay off first and in what order, so you can get out of debt faster and save on interest payments.

Getting into debt beyond what you can handle can be a frustrating and embarrassing situation. Debt Wise may be able to help you develop a plan to pay down your debt, guide you as you work through the plan, and provide some accountability to help you stick to it.

Equifax and Debt Wise can’t fix your credit score or change your credit history. But if you create a plan to pay down your debt, and stick to it, you’ll soon start to see your bad debt looking more like good debt.

*Debt Wise does not provide debt management advice, credit counseling, financial planning or counseling, and will not act as an intermediary between subscribers and their lenders/creditors. Subscribers must continue to pay their lenders/creditors directly in accordance with their terms. Debt Wise will not improve or repair subscribers’ credit history or score, or debt-to-income ratio. Debt Wise is not available in NV, UT, or DC. See equifaxdebtwise.com for important additional information.

Read More:

How To Dispute Credit Report Errors
Four Things College Kids Need To Know About Credit
Four Myths About Your Credit History
Debt Reduction: Why Paying Down Your Credit Card Debt Helps Your Credit Score

The fact is, keeping an eye on what’s in your credit report and knowing your credit score could save you money. A better credit score could get you better interest rates and make a big difference in the amount of your loan payments.

Your credit score is based on the information contained within your credit report, so keeping track of what’s happening with your credit and how your credit behavior impacts your credit score is important. Credit monitoring is one way to stay on top of what’s happening with your credit-and protect your identity.

Credit monitoring products enable consumers to track and protect their credit and identity by monitoring at least one, but often times all three, of their nationwide credit reports and alerting them of key changes to the information in their credit files throughout the year.

How Credit Monitoring Helps You Understand, Track and Protect Your Credit:

1. Identify fraud quickly. Identity theft and fraud can drop your credit score like a rock. You can check your credit report every few months for accounts and activity you didn’t initiate, but credit monitoring will help you quickly identify any unauthorized changes to your credit report. And the sooner you can identify fraud on your credit report, the easier it will be to get started on the path to restoring your identity.
2. Understand how your credit behavior can impact your credit score. There’s a lot of discussion over what is the “right” credit score. The score is a reflection of the data collected in your credit report, translated into numerical form. Generally speaking, if your score has been steadily rising over time, creditors will look at you much more favorably than if you dropped say 75 points in the last year. By seeing how your credit behavior can affect your credit score, you can work to change your behaviors. Some credit monitoring products like Equifax Complete include features like the Interactive Score Simulator to show you how your actions may change your score.
3. Understand how lenders and creditors view you. If you’re looking to buy a new house, you prepare for the purchase: you research neighborhoods and check out the schools; you hire an inspector to look at your potential home. Your preparation should also include looking into and understanding your credit score. You’ll want to understand how lenders and brokers will see you and get a sense of what kind of rates you’ll qualify for, as well as what price range you should consider. And if you know your credit score does not meet the lenders requirements ahead of time, you can focus your time and efforts on raising your score before you make a major purchase. A higher credit score can get you a better interest rate.
4. Access to free, exclusive and/or customizable features. There are many credit monitoring products on the market. Price should not be the greatest determining factor. Make sure that the credit-monitoring product you choose provides the features you need. Some products will send alerts to your wireless phone and some even offer identity theft insurance. However, you need to assess your financial goals and determine what features you need to best take control of your credit. For example, Equifax Complete not only includes monitoring and automated alerts of key changes to your Equifax, Experian and TransUnion credit files, but it also has a feature exclusive to Equifax, Automatic Fraud Alerts. This feature will renew your Equifax initial 90 day fraud alert request automatically every 90 days, free of charge.
   

The financial world is changing, and credit, identity protection and debt-related products can help consumers prepare for these changes. I look at consumer products in terms of how they can help people understand credit and identity and how these two things affect their day-to-day lives.

Credit is a huge part of your identity. It’s how creditors, lenders, employers, and insurers view you. Although you can’t always change your credit information, you should be aware of it. You don’t want to be caught unawares when you’re sitting at your mortgage lender’s desk filling out an application. The key is responsible credit behavior-which consumers should also look at as reputation management.

Your credit report is an anchor of your financial life. Maybe you understand the components of your credit report and feel pretty confident in your 680 credit score. But your lender understands that not all 680′s are created equal, and you should understand why.

Say you had a 750 credit score a year ago, but then you were unemployed for a few months, skipped a credit card payment, and were a little late on your mortgage. Your score dropped down to 680, and you’re not looking as good as another applicant who, although he also has a 680, has been steadily improving his score for the last year through on-time payments. Generally speaking, the other guy will probably receive a better rate and pay fewer fees.

Your credit report and credit score don’t paint the whole picture of your financial life, but by staying aware of what’s going on with your report and score, you’ll be better financially prepared than someone who has no clue or hasn’t had an active credit life.

I see awareness growing in some parts of the population, but I still see people with their heads in the sand. They think what they don’t know won’t hurt them. I see this more with the older population.

Younger people are more willing to share personal information to get something in return. But with this growing willingness to share information comes a need to protect it, and to understand how it is being used.

There are many ways and opportunities for you to educate yourself and take control of your credit life. I hope to use this blog to share information about what you can do beyond checking your credit report and credit score. I also want to hear from you. Have you used credit- or identity-monitoring products? What did you like? What would you change?