Credit Checks for Youth in Foster Care: Evaluating Program Outcomes in Virginia

Background/Purpose: Youth in foster care are uniquely vulnerable to identity theft. Sensitive personal information often passes through many hands as foster youth move through various schools and residential placements. When youth exit care and transition to adulthood, unresolved identity theft issues present barriers to self-sufficiency by inhibiting access to housing, transportation, employment, and loans. Recently enacted state and federal policies reflect a rising awareness of the economic and social justice issues surrounding fraud victimization of children in foster care. A 2014 federal law mandates annual credit checks for foster youth ages 14—17. Virginia has enacted similar state laws, and in July 2019 will require credit security freezes for foster youth. Despite increased public and legislative attention, there are few available studies investigating foster youth credit check programs. Program evaluation research is needed to refine best practice guidelines and caseworker training efforts. The current descriptive study aims to investigate Virginia’s credit check program and offer policy and practice recommendations.

Methods: Data for the study were derived from youth credit reports generated by three major credit bureaus (Experian, Equifax, and TransUnion) over a 3-year period. From January 2016 through January 2019, the Virginia Department of Social Services conducted credit checks for 4,141 youth in foster care. More than 12,000 credit reports were evaluated for errors, fraud, address discrepancies, issue origination dates, creditors, and account types and balances. Youth birth dates, gender, family associations, and custody data were extracted from case files. Successive credit reports for affected youth were longitudinally evaluated to determine whether issues were resolved or additional issues appeared. ANOVA and Chi-Square tests were used to explore relationships between geographic, demographic, and credit-related variables.

Results: Problematic credit report issues were discovered for 343 youth in the dataset. Youth were, on average, 14.36 years of age (SD = 2.72) when accounts or inquiries were opened in their name. The average discovered account balance was $2,348. Most accounts (75%) were in collections. Accounts and inquiries were most frequently associated with financial services (39%); cable, cellular, and internet services (35%); and healthcare (14%). Credit report issues among siblings were often linked to the same creditor and issue type, with accounts and inquiries opened an average of 3.25 months apart. Issue frequencies and account balances were significantly different across geographic regions. Problematic issues, collectively totaling $64,431, were removed from 19% of affected youths’ credit reports. Forty-four percent of youth turned 18 or left care before discovered issues were fully resolved.  

Implications: Findings highlight the importance of implementing credit check programs for youth in foster care. Credit check practice guidelines and caseworker training should be updated to rectify the high number of youth who turn 18 or exit care before full issue resolution. Common links discovered among siblings’ credit report issues, average youth age at issue origination, and geographic clusters of issue types should inform best practices and training efforts in Virginia. Results also establish a baseline for future research to assess the impact of pending credit-related policy changes.