In most cases, children in foster care should not have credit issues because minor children do not usually have the legal capacity to sign a contract or apply for credit on their own. If credit issues exist for a child under age 18, it may be due to error, fraud or identity theft. When negative credit issues exists for children, the information needs to be corrected to protect their identity and future credit.
On Sept. 29, 2014, the Preventing Sex Trafficking and Strengthening Families Act, Public Law 113-183, was signed. The law expanded the requirement that youth in foster care age 14 and older receive a copy of their consumer credit report, as defined in section 13C.001, annually until discharged from foster care, and receive assistance in interpreting the credit report and resolving any inaccuracies. Effective Aug. 1, 2015, the requirement for youth in foster care age 14 and older to obtain annual credit reports was added to Minnesota Statutes, section 260C.212, subdivision 1 (c) (12) (iv).
The intent of the law is to:
Identify if youth have been subject to identity theft, and resolve inaccuracies
Assist youth in understanding the importance of having a credit check completed
Teach youth how to review a credit report, and
Educate youth on the credit report process so they continue this practice after foster care.
What is a credit report?
There are three major credit reporting agencies – Equifax, Experian and TransUnion – that gather and maintain information about individuals. A credit report is a record of an individual’s credit activity and history. It identifies companies that extend credit and/or loans, credit limits, payment history, delinquent accounts, bankruptcies, foreclosures or lawsuits.
The credit reporting agencies provide the above information in a credit report to organizations or individuals when requested. Information in a credit report impacts how much a person pays for loans and other credit. Insurance companies often use information in a person’s credit report to determine how much to charge for automobile and homeowner’s insurance. Some employers and landlords also access credit reports to determine whether to give a person a job or rent an apartment.
Federal and state law requires youth in foster care, ages 14-21, to receive annual credit reports from the three credit reporting agencies, Equifax, Experian and TransUnion. The following is how youth get their reports.
The Minnesota Department of Human Services obtains credit reports on youth who have been in foster care for 30 consecutive days and have a birthday in the quarter that the report is requested.Credit reports are sent to county and tribal social service agencies. The reports are to be reviewed by case workers with youth and assist them in correcting any credit issues and/or errors.
Case workers assist youth in obtaining free annual credit reports from the three credit reporting agencies until discharged from foster care. Credit reports can be requested from annual credit report. It is important for youth to learn how to protect their financial futures and make financial choices that helps them achieve their goals.
The department partnered with the University of Minnesota’s Center for Advanced Studies in Child Welfare to produce two online modules:
“Caseworker Responsibility and Credit Reports for Youth in Foster Care” discusses the roles and responsibilities of caseworkers in various levels of government and tribal agencies in the event of a credit report on a foster youth’s record. The module is on the Center for Advanced Studies in Child Welfare website at http://z.umn.edu/creditworker.
“Understanding Credit: An Online Training for Youth in Foster care” is designed to assist youth in foster care with managing and monitoring their credit, and helps them gain an understanding of the importance of their credit report. The module is on the Center for Advanced Studies in Child Welfare website at http://z.umn.edu/credityouth.