Regulation

CFPB provides tools to protect foster children from credit report errors

Richard Cordray

Richard Cordray

The CFPB published action letters on Thursday for child welfare caseworkers to report errors on the credit reports of the children they care for to credit bureaus.

“The Bureau is very concerned about foster care children’s vulnerability to credit reporting problems that can wreak financial havoc for them,” CFPB Director Richard Cordray said. “We want to help ensure that youth leave foster care with clean credit so that they have a firm foundation for their financial future.”

Federal law requires that child welfare groups must ensure children in foster care ages 16 and older receive a free copy of their credit reports annually in order to be eligible for federal grants. Additionally, child welfare agencies are required to assist youths in interpreting and resolving inaccuracies in credit reports.

“It is critical to help youth identify and correct any credit errors before they leave the foster care system,” the CFPB said. “It is often easier to correct such errors before a young person turns 18 because it may be easier to demonstrate that the information in the credit report is incorrect when the person is a minor.”

In addition to the action letters, the CFPB also published tip sheets for caseworkers and foster parents to help them educate youths on maintaining good credit.

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