Five Questions with Casey: Beadsie Woo on Protecting the Credit of Foster Youth

As a senior asso­ciate in the Annie E. Casey Foundation’s Cen­ter for Com­mu­ni­ty and Eco­nom­ic Oppor­tu­ni­ty, Bead­sie Woo works on strate­gies to help vul­ner­a­ble fam­i­lies build and pro­tect their assets to become more finan­cial­ly sta­ble. She coau­thored Weath­er­ing the Reces­sion: The Finan­cial Cri­sis and Fam­i­ly Wealth Changes in Low-Income Neigh­bor­hoods, a report that explored what hap­pened to assets, debts and home equi­ty for fam­i­lies liv­ing in low-income neigh­bor­hoods dur­ing the Great Recession.

Q1. Build­ing good cred­it is impor­tant for all young peo­ple going out on their own, but young peo­ple aging out of fos­ter care face spe­cif­ic chal­lenges. What are they?

Every year, more than 26,000 young peo­ple age out of fos­ter care, many with no per­ma­nent fam­i­ly con­nec­tion to help them nav­i­gate the road to adult­hood. Estab­lish­ing cred­it is one road­block that reg­u­lar­ly presents itself for youth who have been in fos­ter care. This is because of iden­ti­ty theft: The risk of iden­ti­ty theft is greater for young peo­ple in fos­ter care because they move fre­quent­ly and their Social Secu­ri­ty num­bers pass by many more adults than the typ­i­cal young per­son. Adults in the lives of fos­ter youth may use the young people’s iden­ti­ty to open cred­it accounts, take out loans or pay bills. The young peo­ple often don’t real­ize there is a prob­lem until they are barred from rent­ing an apart­ment, pur­chas­ing a car or even get­ting a phone because of a bad cred­it report. In total, about five per­cent of cred­it reports of youth in fos­ter care show iden­ti­ty theft.

Q2. What is being done to help young peo­ple in this plight?

In 2011, Con­gress enact­ed a law requir­ing that young peo­ple ages 16 and old­er in the fos­ter care sys­tem receive copies of their cred­it reports on an annu­al basis, as well as assis­tance in resolv­ing any inac­cu­ra­cies before leav­ing the sys­tem. But imple­men­ta­tion of the law has been slow and prob­lem­at­ic in many states. It’s a com­plex and time-con­sum­ing issue to address; it’s also an unfund­ed man­date for child wel­fare agencies.

Q3. What role has the Casey Foun­da­tion been play­ing to help resolve this problem?

We are try­ing to get good infor­ma­tion to child wel­fare case­work­ers, men­tors and oth­er adults in young people’s lives so that they know why get­ting cred­it reports is so impor­tant and under­stand the cur­rent and future impli­ca­tions of these reports. We’ve been try­ing to encour­age con­ver­sa­tions between cred­it bureaus, reg­u­la­tors, con­sumer pro­tec­tion and human ser­vices offi­cials so that stake­hold­ers can work togeth­er to address this issue. We just released Youth and Cred­it: Pro­tect­ing the Cred­it of Youth in Fos­ter Care, which details steps every­one should be tak­ing to help youth in fos­ter care. We also devel­oped edu­ca­tion­al resources for youth regard­ing credit.

Q4. What are some of the stick­i­est issues in resolv­ing these cases?

It should be easy to detect iden­ti­ty theft when a bad cred­it report turns up on a young per­son because he or she could not even have acquired cred­it legal­ly before age 18. But states are fac­ing a num­ber of chal­lenges and dis­crep­an­cies in the pro­ce­dures for request­ing and receiv­ing cred­it reports from the cred­it report­ing agen­cies — and in clear­ing up inac­cu­ra­cies. And while pros­e­cu­tion might be the log­i­cal step in the state court sys­tem when iden­ti­ty theft is con­firmed, young peo­ple in the child wel­fare sys­tem may be reluc­tant to pur­sue lit­i­ga­tion against a fam­i­ly mem­ber or some­one else with whom they want to main­tain a con­nec­tion and good relationship.

Q5. Young peo­ple devel­op prob­lems with bad cred­it for oth­er rea­sons besides iden­ti­ty theft. Does your work also help edu­cate youth in fos­ter care about this issue in general?

The Jim Casey Youth Oppor­tu­ni­ties Ini­tia­tive, among oth­er efforts, focus­es more direct­ly on finan­cial edu­ca­tion and empow­er­ment for youth in fos­ter care, but we want to first ensure that they receive their cred­it reports and assis­tance in clear­ing up inac­cu­ra­cies as required by law. Review­ing the cred­it report is a teach­able moment for con­vey­ing how cred­it will affect one’s life for bet­ter or worse. In the past, peo­ple looked at cred­it reports only when some­one was apply­ing for cred­it. Now cred­it reports are looked at for rea­sons unre­lat­ed to bor­row­ing such as get­ting a job or an apart­ment. We need to impress upon young peo­ple the impor­tance of cred­it, how to build a good report and how it affects so many facets of life.