- May 2012
- Vol. 13 No. 4
Clearing Credit Records for Transitioning Youth
Recognizing that youth in foster are at a high risk for identity theft, a 2006 California law aimed to clear the credit records of transitioning youth prior to their exit from care. A new report by the California Office of Privacy Protection (COPP) summarizes the many challenges in implementing the law, describes a pilot project to overcome those challenges, and provides recommendations for new procedures to protect this vulnerable population.
Execution of the law proved to be challenging because of limited funding and the automated process for requesting credit scores, which left many minors unable to obtain their scores. In 2010, COPP, in collaboration with the Los Angeles County Department of Children and Family Services (DCFS), the Los Angeles County Department of Consumer Affairs, and the three national credit reporting agencies (CRAs), tested the procedures for implementing the law's intent. They evaluated the credit records of 2,110 transitioning youth, ages 16 and 17, in Los Angeles County. Key findings included the following:
- Negative items were successfully removed from the credit reports of 104 foster youth (5 percent of the sample).
- These 104 youth collectively had 247 separate accounts reported in their names. Since CRAs do not knowingly create records on minors, these accounts are the result of fraud or error.
- The average account balance was over $1,800, and the largest was a home loan in excess of $200,000.
- On average, the accounts were opened when most of the youth were 14-years-old.
Overall, the pilot project was a success, and the processes that were implemented subsequently proved to be efficient and secure. In addition, the COPP made the following recommendations:
- The Los Angeles County DCFS should submit to law enforcement the data obtained via the pilot project for review against possible crimes of theft.
- The State of California should centralize credit report requests through the State's Department of Social Services.
- CFAs should develop a secure and automated procedure for requesting credit reports for minors and offer parents and legal guardians, including foster parents, the ability to suppress minors' identities.
A Better Start: Clearing Up Credit Records for California Foster Children is available on the COPP website: