Children and youth in the foster care system are at high risk for financial fraud because of their frequent moves and the fact that many – sometimes unscrupulous – people may have access to their personal information. A recent Los Angeles County study found that eight percent of 16- and 17-year-olds in the foster care system had fraudulent items on their credit reports, and the report further stated that the number would be much higher had those younger and older than 16-17 been surveyed.
The story of Katrina Haywood is a good example of what can go wrong very quickly when she entered into a foster care home. Her biological mother had taken out a series of loans attributed to her name and when she turned 18, her credit score was ruined and had a deficit of $6,000.
Federal law (P.L. 112-34, signed 9/30/11) mandates that agencies looking to secure a federal grant must provide foster youth with a copy of and an explanation for their credit report at the age of 16. On May 1, 2014 The Consumer Financial Protection Bureau released a set of tools to help foster youth repair their credit.
The CFPB toolkit consists of three action items, along with a variety of tip sheets that are designed to help youth kick start and sustain a good line of credit. These kinds of tools will help to protect children and make sure they have bright and financially stable future
It is stories like Katrina’s that this law and the CFPB toolkit are designed to prevent. Ideally this law can be beneficial for anyone under the age of 18 with an interest in their credit report, for understanding credit and learning about these policies can help all young people take a step ahead in life.
Nicholas Filler studied English with an emphasis in writing at Boise State University. He enjoys spending his days outside, skiing during the winter, and learning about engineering whenever there is time. Currently, he is working on 3-D printing related projects and creating digital art in his free time.
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