Help your kids, and maybe yourself!

Recent studies have shown that barely half of today’s college students have a credit card compared to nearly 90% that say they have and use a debit card.  While this sounds like a good trend there are some troubling facts associated with it.

I agree that debt cards are better for most college students than the old practice of getting on campus and being approved for several credit cards.  However, the trend is causing more and more responsible college student s graduating college with no credit score at all.  Many will read this and say “who cares” but a lot of you will understand that not having a credit score can be just as detrimental as having a bad score.  If your child plans to graduate from college and only have their parents (you) finance everything for them (car, house, insurance, etc) or immediately become so wealthy they can afford to pay cash for everything, then much of this advice will not apply.  For the rest of us, here are the best ways parents can help their kids start building a credit score that will allow them to become financially independent.

Having a credit card is extremely important to achieving and maintaining a good credit score.  Please note I am not advocating getting in credit card debt, that is a different topic altogether.  Having a credit card does not mean you have to buy things you can’t afford and end up in debt!  There are several ways that parents can help their kids obtain a credit card which will help them get a credit score:

Authorized user- adding your child as an authorized user on one of your credit cards is a great way to get started.  As an authorized user the person being added will get the entire history of the account added to their credit profile.  This is a great way to help kids start to build credit.  Now before you do this, understand that if your payment history is bad or your card has a high balance compared to the card limit you might not want to add them to your card.  Everything that has been reported about your account will appear on their credit report.  You don’t want to pass on your late payments so make sure the account has a good history before adding them.

Please be aware that some credit card companies will add authorized users but they will not report to the authorized user’s credit report, so make sure to ask about this before adding them.  If the credit card company asks for the authorized user’s social security number than most likely they are going to report the history of the account to their credit report.

Secured credit card– encourage your child to get a secured credit card.  Most secured credit cards will require a deposit of $300 to $500. if you really want to help your child then do so by giving them the deposit to get approved for this card.  This is a great option because it is an easier card to get approved for (because it requires a deposit) and for this reason it is less risky to the banks or credit card issuers.

Co-sign for a credit card– this is without a doubt my least favorite option.  When you co-sign for someone you are just as liable for all money owed and the payment history on the account as the person you are co-signing for.  So if your child misses payments your credit is going to feel the pain.  The only way I would recommend doing this is if you make sure you can check the statements along with verifying that each payment is being made.  It might sound like a pain, but the pain of doing this is much less than the pain your credit score will experience with missed payments.  This idea to me is a last resort option and only if they can’t qualify on their own for a secured credit card.

In addition to discussing these options with your child I would encourage  you to spend some time discussing the importance of credit and the long term effects that having bad credit can have.  Starting with good credit habits early will make it easier for your child to keep those habits as they get older.  If you don’t know anything about credit you should spend some time getting educated so that you can pass on accurate information to your children. There are several resources that can help you including my website,!  Please feel free to contact me if you have additional credit questions at 970-302-5185.


Author: Dan Beck

Dan Beck is a credit repair expert who teaches consumers how to create an "A Rated" credit profile. Would you like to receive a FREE Consultation with Dan? If so, click here.

Comments are closed.