Each year, thousands of youth age out of foster care into adulthood without achieving permanency. For many youth, their transition into adulthood is further complicated by having poor credit, which they may discover for the first time when they apply for a job, apartment, cell phone service, bank account, car or student loan.
Some research suggests that 5- 10% of youth in foster care have negative credit files due to creditor errors (a hospital wrongly billing the youth), mixed identity, incorrect or fraudulent use of a youth's name or Social Security Number on delinquent accounts, or instances of identity theft or fraud. In response to this issue, a law enacted requiring Annual Credit Report for foster youth through the Child and Family Services Improvement and Innovation Act. The President signed P.L. 112-34 into law on September 30, 2011. Among other provisions, P.L. 112-34 amends the case review system definition to require that each child age 16 and 17 in foster care receive a copy of any consumer credit report (TransUnion, Equifax and Experian) annually until discharged from foster care, and must be assisted in interpreting the credit report and resolving any inaccuracies (section 475(5) (1) of the Act). On September 29, 2015, the Sex Trafficking and Strengthening Family Act was amended to include the expansion of the federal mandate requiring each youth ages 14-17 to receive a copy of their credit report.
This law significantly impacts and promotes youth's future eligibility for credit, student or car loans, insurance, housing, and employment as credit report ratings and history can change the youth's life trajectory.
All youth 14-17 currently in care are eligible to receive a credit report process annually within 90 days of your birthday.
Identity theft also referred to as identity fraud is a form of stealing someone's identity in which someone pretends to be someone else by assuming that person's identity, usually as a method to gain access to resources or obtain credit and other benefits in that person's name. The victim of identity theft (here meaning the person whose identity has been assumed by the identity thief) can suffer adverse consequences if they are held responsible for the perpetrator's actions.
For additional information on identity theft, visit the Federal Trade Commission Consumer Information on Identity Theft online here.
Impact On Youth
Youth in foster care are more vulnerable to identity fraud for the following reasons:
- While in foster care, youth are exposed to multiple placements presenting more opportunity for people to gain access to their personal information (such as social security number and birthdates).
- Youth are young in age when the crime takes place.
- Youth have fewer opportunities to check their financial information and may not know that they are a victim of identity fraud until after they have aged out of foster care.
- Youth are not educated on how to obtain and read their credit report.
The youth's name, date of birth and social security number can be used to open accounts and acquire debt without the youth's permission or knowledge and can ultimately create serious challenges for youth as they transition to adulthood. The following are some of the debts children may acquire when their information stolen:
- Medical Care
- Credit Card Accounts
- Phone Services
- Government Benefits
Credit Report Services
The Credit Report Services is a full services plan that provides the following:
- Train the trainer sessions for DFCS Case Manager to assist youth in interpreting the credit report.
- Annual youth financial education and credit report training which addresses basic money management, avoiding identity theft and correcting any disputes on the credit report.
- Execution of the annual credit report check for youth ages 14 to 17.
- Youth Interpretation Sessions.
- Dispute process for credit report conflicts or inaccuracies.
- Credit counseling for youth who receive any inaccuracies on the credit report.
- Foster Youth (age 14 to 17)
- Court Judges
- Special Appointed Attorney General (SAAG)
- Independent Living Program Credit Report Specialist
- DFCS Case Managers and Supervisors
- State Office Staff
What is a Credit Report?
A consumer credit report is a factual record of your credit activities. It reports all your credit accounts and outstanding loans, the balances on your credit cards and loans, and your bill paying history. Lenders are permitted by credit report laws to check your credit report and review it in order to determine whether or not to grant you credit. In order to start to build a credit report, all you have to do is establish credit in the form of a credit card account, car loan, mortgage, or student loan. Most of the information on your credit report comes directly from the businesses in which you have accounts or outstanding loans. When you pay your bills or fail to pay your bills, lenders usually report your credit information - good or bad - to credit report agencies.
There are four main categories of information in your credit report:
Who are the major Credit Bureaus:
Credit Training For Youth In Care
- One-on-One or group training facilitated by the Independent Living Program (GA/RYSE) for DFCS Social Service Case Managers, DFCS Supervisors, Room Board and Watchful Oversight (RBWO) Providers.
- Group training facilitated by the Independent Living Program (GA/RYSE) for Youth in Care held at GA/RYSE workshops.
Additional Training Resources
- E-learning: webinar, DVD, podcast or other electronic training. The following options are free and can be accessed as indicated:
- Understanding How Credit Reporting Works Transunion Consumer Education: 7 Minute Video
National Foundation for Credit Counseling: 10 Minute Video - College Credit for Life.
The College Credit for Life video and Tool Kit introduces students to lessons surrounding the temptations and responsible use of credit cards. Much of the video features young people talking about the mistakes they themselves made in college. The video also features other voices, in the form of an apartment rental agent, a car salesman and a human resources executive, all discussing the implications that both responsible or irresponsible use of credit can have as students prepare to move on from college and into the real world.
Consumer Credit Basics PowerPoint - Michigan Credit Unit League
The Consumer Credit Basics PowerPoint from Michigan Credit Unit League provides basic information about lending and credit that everyone needs to know in order to use credit wisely and enjoy personal financial health. Appropriate for Middle and High School students as well as adult audiences.
You are automatically processed for a credit report once the court order is approved by your local judge. Contact your Independent Living Specialist if you have not received your annual report.
For youth 18 years and older:
We encourage current or former foster youth ages 18 and up to obtaining their own annual free credit report online at AnnualCreditReport.com. You may has been a victim of identity fraud during your time in foster care.
For adults to obtain a free credit report online annually:
- Go to www.AnnualCreditReport.com.
- Click " Request your free credit reports"
- Click " Request your credit reports"
- Complete the form - including Social Security number, date of birth, etc.
- Click " Next" which will navigate to a page that lists all three reporting agencies - (Equifax, Experian, TransUnion)
- Click the check box for all three names and click “Next”
- You will be led through each agency
- The reports can be reviewed, saved and printed.
The FREE credit reports are only available ONCE per year (additional reports will cost). The reports will also provide information on what to do to resolve any false or inconsistent information.