Managing Credit Accounts and Finances for a Loved One

Highlights:

• Plan ahead, if you can, in the case of an aging parent
• Know what legal options may exist
• You can place a security freeze or fraud alert on the person’s credit reports

Each year, millions of U.S. consumers find themselves managing finances and credit accounts for an aging parent, friend, or family member with special needs. It can be an overwhelming task, but there are some steps you may want to consider – both before and after a need arises – to help better protect them from fraud or identity theft. 

Plan ahead if possible

If your parent still has active financial and credit accounts, you might suggest he or she add a trusted family member or friend to their credit or bank accounts. This may be especially important if he or she is in the early stages of a progressive disease involving memory loss. If it becomes necessary, that person can help pay bills on time, make timely deposits and withdrawals, monitor account balances, and stay vigilant in checking for signs of fraud or identity theft.

Why it’s important: If your parent or other loved one is unable – or becomes unable -- to manage their credit accounts and finances, and you haven’t been able to plan ahead, you may need to piece together their financial affairs yourself. In addition, they could pile up unnecessary debt; miss credit card or bill payments, which may impact their credit reports and trigger late fees or penalties; and they could be unable to recognize signs of fraud or identity theft. 

If they are able, your parent or loved one may sign a Power of Attorney to designate someone to assist with finances if they become incapacitated. A Power of Attorney is a legal document in which the person appoints someone else to act for them under certain circumstances. 

As part of your preparation, consider gathering information such as personal identification numbers (PINs) for bank cards, access codes and even passwords for online accounts.

For someone who cannot manage their finances alone and has not signed a Power of Attorney appointing someone to act on their behalf, a court-appointed guardian can be designated. An attorney can help you find out more about options. The Consumer Financial Protection Bureau also has financial caregiving resources on its website. 

If you have a Power of Attorney or are a court-appointed guardian, you can contact your parent or loved one's lenders and creditors and banks to find out what information you'll need to provide to gain access to their accounts.

Monitor your loved one’s credit reports

If your friend or relative has a credit history, checking their credit reports can help you ensure the information is accurate and complete. Your parent or loved one is entitled to a free copy of their credit report every 12 months from all three nationwide credit bureaus.

In order to access your parent or loved one's credit reports, you’ll need to send a written request and documents by mail to the credit bureaus. Those documents will be used to verify your identity, their identity and your ability to legally act on their behalf. To request a copy of your parent or loved one's Equifax credit report, please send your request and documents to:

Equifax Information Services LLC
P.O. Box 740241
Atlanta, GA 30374-0241

In your letter, please include: your parent or loved one's full name, Social Security number, date of birth, and the address to send the copy of their credit report.

To prove your parent or loved one's identity, include both of the following:

• A copy of their birth certificate
• A copy of their Social Security card

To prove your identity, include one of the following:

• A copy of your driver's license
• A copy of your Social Security card
• A copy of your birth certificate

To verify your ability to legally act on their behalf, include one of the following:

• A copy of a court order
• A copy of a lawfully executed and valid Power of Attorney

Consider placing a security freeze or fraud alert on the person’s Equifax credit report

A security freeze is one tool you can use to restrict certain access to their Equifax credit report. Unless you temporarily lift or permanently remove a security freeze, the Equifax credit report can’t be accessed to open new accounts (subject to certain exceptions). To place a security freeze on the Equifax credit report of a parent or loved one, you can download this form and follow the instructions. Security freezes must be placed separately with each of the three nationwide credit bureaus.

With a fraud alert, third parties such as lenders and creditors can access credit reports, but when they do, they are notified that they should take steps to verify the person’s identity before granting new or additional credit. When you place a fraud alert on an Equifax credit report, Equifax will refer the fraud alert request to the other two nationwide credit bureaus – Experian and TransUnion – so they can also place the same alert on your parent or loved one's credit reports. An initial fraud alert lasts for one year, and can be renewed. To request a fraud alert be placed on your parent or loved one's Equifax credit report, you can download this form and follow the instructions.

If the person has been a victim of identity theft and you have a police report or an FTC Identity Theft Report, you can request a 7-year extended fraud alert be placed on their credit reports. Learn more about fraud alerts and security freezes.

Keep track of credit card charges and bank account activity

You’ll want to keep an eye out for any indications of fraud or identity theft – unauthorized charges or withdrawals, for instance. 

Taking over a loved one’s finances and credit accounts is an important task, and it’s worth taking the time to do your homework and get all your questions answered to secure their financial future and help better protect them against fraud, identity theft and financial abuse. If you need help, there are many resources and professionals who can help you navigate the process.