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How To Prevent Child Identity Theft By Freezing Your Kid’s Credit




Identity theft is a constant threat these days. With the number of major data breaches that have occurred in the past few years, such as the unprecedented Equifax breach in 2017, you’ve probably experienced some form of financial fraud by now.

You might keep a close eye on your own finances for just that reason, but there’s someone else who is especially susceptible to becoming an identity theft victim: your kid.

Fortunately, a new law went into effect on Sept. 21 that lets you freeze your credit ― a helpful preventative measure ― for free. Here’s how and why you should freeze your child’s credit, too.

Child Identity Theft Is A Growing Problem

A study by Javelin Strategy and Research found that more than 1 million children were victims of identity theft in 2017. Two-thirds of those victims were under the age of 8.

If they’re lucky, parents might receive a notice addressed to their child from a collection agency or the IRS to tip them off. Usually, though, it’s not until child victims are much older that the fraud is discovered. By that time, extensive damage has already been done.

“When you commit fraud on an adult, that adult is busy building their life ― buying a house, getting a car. Credit checks are more likely to occur and they’re more likely to discover the fraud,” said Jerry Linebaugh, founder of JLine Financial in Baton Rouge, Louisiana. “But in the case of a 2-year-old, they’re not going to check their credit for at least a dozen years. That’s a long time that [criminals] can go out there and not only use that fraudulent account, but sell the identity.”

By the time that child actually needs to access credit, whether it’s to receive some sort of federal benefit, rent their first apartment or take out a student loan, their credit has been wrecked.

Placing a freeze on your child’s credit file can prevent fraudsters who accessed their personal information from actually using it.

What Is A Credit Freeze?

When you freeze your credit, you restrict access to your credit reports. If anyone tries to apply for a credit card, take out a loan, rent an apartment, open a cell phone account or do anything else in your name that requires someone to pull your credit report, they’ll be unable to do so as long as the freeze in place. Then, when you do want to apply for credit, you have to “thaw” your credit file first.

In the past, instituting a credit freeze was a tedious and somewhat pricey process. It required you to contact each credit bureau individually, place a freeze on your file with that particular bureau and pay around $10, depending on where you lived. If you didn’t freeze your credit with all three major bureaus ― Experian, Equifax and TransUnion ― your personal information was still susceptible to fraud. If you wanted to unfreeze it, you’d have to go through that same process again. Then to re-freeze … well, you get it.

However, once the Equifax data breach occurred, the process of freezing credit with the company went from a moderate inconvenience to total nightmare. Phone lines were jammed and the site kept crashing; people waited until the middle of the night to try and get through with still no success. In fact, following the breach, less than 1 percent of customers bothered to freeze their credit.

Fortunately, things have calmed down since then. And if there’s any silver lining to the whole situation, it’s that Congress responded by creating the Economic Growth, Regulatory Relief, and Consumer Protection Act, which now requires the credit bureaus to provide credit freezes for free. And they have to do it fast: Freezes are to be implemented by the next business day, and unfreezing (also free) should take no more than an hour. Parents can freeze the credit file of any minor under the age of 16; those age 16 and older are treated as adults and can freeze their own credit.

Credit Freeze vs. Credit Lock

Linebaugh noted that there’s an important distinction to make when it comes to credit freezes and similar-sounding credit “locks.”

Equifax began offering credit locks for free following the company’s data breach. It’s a service similar to that already offered by TransUnion (also free) and Experian (available as part of a credit monitoring bundle, the cheapest of which costs $9.99 a month).

A credit lock is similar to a credit freeze in many ways, but there are two key differences.

First, it’s much easier to unlock a credit report than it is to unfreeze it. Secondly, it absolves the credit bureau from any legal responsibility should the lock fail. That’s because federal law governs credit freezes, but not credit locks. So if there’s a problem ― the freeze wasn’t placed as requested, or your information is leaked ― you might have legal recourse. A credit lock, on the other hand, is a proprietary product and service agreements state there’s no guarantee the tool is foolproof.

Now that credit freezes are free, there’s little incentive to choose a credit lock to protect your information

How To Freeze A Child’s Credit

The Javelin Study found that data breaches are even more of a risk for minors than they are for adults. Last year, at least one minor in 11 percent of households had their data compromised as a result of a breach. Among those who were notified their information was breached, 39 percent became victims of fraud, compared to 19 percent of adults who were notified.

However, if there’s a credit freeze in place, fraudsters will be blocked from opening any new accounts in a child’s name. But before you can freeze your child’s credit, the first step is to find out if he or she has a credit file in the first place.

The credit bureaus don’t keep data on minors under the age of 14. After all, your toddler probably hasn’t taken out any loans. “There shouldn’t even be a credit file there,” said Linebaugh. “If there is, it’s usually fraudulent.” The only exception is if you added your child as an authorized user on a credit card or put any other credit in their name.

If there isn’t any credit file for your child, you’ll have to create one so that you can freeze it. To find out if your child has any credit information on file with the bureaus, you’ll need to contact each credit bureau individually and follow their process (minors 14 years old and up can visit to request their own credit reports).

Experian: Start by filling out this form and mailing it, along with an extensive list of documents, to the address listed on the form. Alternatively, you can fill out the form and upload all the documentation via Experian’s online platform. Once you’re ready to freeze your child’s credit, you can do so online.

Equifax: Contact Equifax’s minor child department in writing (details here) to find out if your child has a credit file. To place or lift a credit freeze, fill out the minor freeze request form and mail it to Equifax along with required identification.

TransUnion: Start by filling out a child identity theft inquiry form. TransUnion will let you know if it finds a credit file, and if so, will launch an investigation into the matter. To place a freeze on your child’s credit, submit a request online.

If it turns out your child does have an existing credit report on file with any of the bureaus, you should also take the following steps in addition to placing a credit freeze:

  • Contact each credit bureau and place a fraud alert on your child’s files.
  • File a police report.
  • File a complaint with the Consumer Financial Protection Bureau.
  • Submit a fraud report to the Federal Trade Commission.

Remember, a credit freeze can prevent criminals from opening new accounts in your child’s name, but it can’t undo existing damage. If your child’s sensitive personal information, such as their birthdate and Social Security number, already fell into the wrong hands, there might be years’ worth of cleanup to do. But considering how easy (and free!) it is to freeze your child’s credit, there’s no reason to skip this step. It only saves you a potential headache.


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4 things kids need to know about money




(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity




Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard




Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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