The foster care system in the United States is a double-edged sword. There are few things more altruistic than a loving family taking in a child for any period of time, and giving that child love and care and a safe place to live. Unfortunately, the foster system is understaffed and there are those for whom being a foster parent is merely an invitation to exploit an already exploited child.
One of the ways this exploitation can occur is through the foster child’s own credit history. There is, of course, the possibility of outright identity theft. Foster parents are often given lots of information concerning their charge. Most minors, foster and otherwise, have never even accessed their credit score. They likely do not even have a credit history. Opening credit accounts in that child’s name and using them illicitly can harm the child’s credit history for years.
CFPB teams up in protecting the credit of foster kids
While the effectiveness of the Consumer Financial Protection Bureau has been a mixed-bag since inception, sometimes creating more harm than good, it is doing good in encouraging child welfare agencies to pro-actively assist foster children with obtaining and interpreting their credit reports.
The CFPB has issued action letters to welfare agencies to address these issues. First comes a reminder that the Child and Family Services Improvement and Innovation Act requires agencies to check the credit reports of those over 16 on an annual basis. The child’s age is a big factor here because one cannot legally enter into a contract for credit as a minor. Thus, if any accounts have been opened, then it’s a sure sign someone has tampered with that child’s credit. The good news is that the culprit is likely to have been a previous foster parent, and they can be tracked down for criminal charges.
The same goes, more or less, if they are under 18. A foster kid is highly unlikely to have any credit accounts, because they are still a minor under 18. The only reason they might have an account is if they were made an authorized user, and it’s unlikely a foster parent would do that.
Guidance also includes advice from the Nerds about how to dispute credit reporting errors, and about the importance of establishing, maintaining, and protecting one’s credit.
Agencies could use help developing prevention strategies
Ultimately, however, this matter shows the limitations of government. The CFPB isn’t actually doing anything, aside from sending action letters.
Instead, these matters will fall to case workers. They are often overwhelmed as it is, and their agency supervisors have a lot on their plate, as well. Welfare agencies need to partner with entrepreneurs to prioritize and innovate preventative measures, and make sure case workers stay on top of them. That’s the best way to protect the most vulnerable among us.
Family image via Shutterstock