Managing Credit Accounts and Finances for a Loved One

Imagine that the unthinkable happens and your loved one suffers from sudden memory loss or an extended illness. Would you be able to step in and take over their financial affairs? Perhaps you’re in that situation now. It can be difficult to figure out what you need to do to help. As the circumstances for family members and friends change, you may find yourself managing credit accounts and finances for a loved one. 

Here’s what you need to know to protect their assets and prevent fraud losses.

Plan Ahead 

Postponing the inevitable won’t slow the aging process and could put your loved one in a precarious situation. Chances are that you don’t have enough information to do the job should the unforeseeable occur. The best defense is a good offense.

Take preventative steps now. Once your loved one is unable to take care of their finances, it can be more difficult to help them since you may need to figure it out without their assistance. It’s important to plan ahead. Ask them to place you or another trusted family member or friend on their accounts. That will help ensure timely payments and allow you to monitor their accounts if necessary to avoid late charges and monitor for fraud. Make sure that the co-owner has a copy of the bank cards, PINs or any online access codes they might need.

Another more formal step is to have your loved one designate a power of attorney (POA). It’s a straightforward legal document that they sign granting legal authority to a trusted friend or relative. Don’t wait until it’s too late. If your loved one is unable to make or understand decisions, it would take a doctor’s assessment, a lawyer and a court order for you to obtain a court-appointed guardianship. If you are in this position now, contact an attorney or legal aid for your state. 

Monitor Your Loved One’s Credit Reports 

Once you have the credit reports, check the balance on loans and lines of credit to ensure they are correct. Also, check the inquiry section to make sure that there have been no attempts to use your loved one’s credit to open an account. If anything suspicious appears on the report, put a lock on all three credit reports so that creditors can no longer have access. Notify the credit issuers and dispute charges that do not belong to your loved one. Contact the police to make an identity theft report.  

Can I Get a Credit Report on a Family Member?

Everyone is entitled to a free credit report each year. To gain access you’ll need to send a written request to all three of the major U.S. credit bureaus and the document that allows you to act on the behalf of another, e.g., a POA. You may be asked to verify your loved one’s identity as well as your own with a birth certificate, social security card and/or driver’s license. The three credit bureaus are listed below:

Experian

P.O. Box 4500

Allen, TX 75013

888-397-3742

TransUnion

P.O. Box 2000

Chester, PA 19022

800-888-4213

Equifax

P.O. Box 4500

Atlanta, GA 30374

800-685-1111

Steps To Consider To Protect Them From Fraud

Identity theft and credit card fraud are at the highest levels yet. In fact, there were some 1.4 million reports of identity theft in the U.S. alone in 2020.  Take the following measures to prevent fraud:

• Set up purchase and fraud alerts on all credit cards. This will notify you when a purchase exceeds a predetermined limit or when a suspicious transaction occurs.
• Use direct deposit for benefits checks to prevent mail fraud.
• If your loved one still requires access to a bank account, establish a small spending account with a debit card and spending limit.
• Instruct your loved one to use caller ID to screen out calls from people they don’t know. Alternatively, if the phone has this capability, block all calls other than those from known numbers.
• Opt out of Direct Marketing Association at optoutprescreen.com or call 1-888-567-8688. 
• Block robocalls via your phone service’s anti-robocall call service or use a third-party call blocking service.

Consider Placing a Fraud Alert 

You can also place a fraud alert on your loved one’s credit report by notifying one of the three nationwide bureaus with a written form. The bureau that you notify first must contact the other two. The fraud alert means that lenders and creditors can access your credit report, but when they do they must take certain steps to verify the person’s identity before granting new or additional credit. The alert lasts for one year and then you must renew it.

How Do I Freeze the Credit for an Elderly Parent? 

It’s relatively easy to lock and unlock a credit report. They aren’t governed by law and you will need to pay to have the service. However, it may be better to place a security freeze. A security freeze is similar to a lock. However, security freezes are governed by law and are more difficult to execute and lift. You must place a security freeze on all three bureaus. It can take up to five business days, but once placed, no creditor can gain access to your credit report unless the freeze is lifted. That can take up to three days.   

Keep Track of Credit Card and Bank Activities 

It can be a tedious task to keep track of your own finances as well as those of your loved one. A credit monitoring service can make the job much easier. SmartCredit® provides all the information you need to keep a close eye on credit card and banking activity. SmartCredit® links to financial accounts so that daily transactions, purchase history and payments are available all in one place. Using SmartCredit®, you can easily monitor all spending and payments. Get started today. 

Resources:

Fool – Identity Theft and Credit Card Fraud Statistics for 2021