Each of the FYI participants crafted a carefully researched policy recommendation during their time in Washington. Today, we highlight the recommendation of Kaylia Ervin, 21, a student at Ferris State University in Big Rapids, Mich. and a former foster youth whose birth mother used her social security number to apply for an energy utility account.
The Child and Family Improvement and Innovation Act should be amended to require several protections for the credit of foster youths. First, credit reports for each youth that enters foster care. Right now, the act requires a check for any foster youth at age 16.
This mandatory early check on credit would prompt one of two actions:
If the credit report reveals credit inaccuracies, states must place a security freeze on a child’s social security number and address the issues.
If there is no evidence of credit fraud, states must notify credit bureaus of a social security number for a child that has entered foster care.
Foster youth are extremely vulnerable targets for credit fraud perpetrated by nefarious birth parents and caregivers. A review of 2,110 foster youth credit reports by the California Office of Privacy Protection showed fraudulent activity in four percent of the reports. There were 274 specific credit accounts in the names of foster youth, including four major loans that averaged $79,550.
Existing federal law has sought to ensure that a foster youth’s credit is reviewed before he or she enters adulthood. As mentioned, federal law mandates a credit check for each foster youth at 16.
The Annie E. Casey Foundation has published a guide for state agencies on implementing that check, and the Consumer Financial Protection Bureau has followed with easy-to-read guides on how to dispute and correct errors.
Ervin’s argument centers on the proposition that there is no reason to wait for 16 when the same process could start upon entry.
In Her Own Words
On the utility account her birth mother opened in her name:
“I did not become aware of the report until it went into collections. I explained to the energy company’s collections department that at the time my mother opened the account I was only 15…the representative simply advised me to fill out a fraud packet and return it.
I realized that the first step was to file a police report. My immediate thought was that I did not want to get my mother in trouble, but I knew that in about a year I would need student loans to fund law school.”
The Chronicle’s Take
If that 4 percent figure in the California study doesn’t alarm you, look at it in this light. About 24,000 teens aged out of foster care, and at that rate, about 960 of them became adults with bad credit. That is nearly 1,000 teens who:
Were likely abused or neglected
Were removed from their own families
The system failed to connect with an adoptive family, guardians or relatives
On top of that, they now enter adulthood challenged to obtain a credit card or borrow money for any reason, including college. For a former foster youth, this could mean the difference between an apartment and being homeless, or college and unemployment.
Requiring repeated credit checks over time might be more protective and feasible than establishing one at entry. Ervin’s proposal would identify fraudulent behavior by adults before the child welfare system got involved, but a foster youth’s exposure to identity theft certainly continues beyond that point.
About half of all foster youth are age seven or below. If the Child and Family Improvement and Innovation Act required credit checks at ages seven, 12 and 16, it would be pretty hard for an identity theft to be missed before adulthood.