When is the right time to help your child establish credit? Arnita Johnson-Hall of AMB Credit consultants says the sooner the better, as long as they can understand debt and finance and the importance of having good credit.
As graduation gifts, my mother gave my brother and I 700 credit scores. She was able to do this by adding us on her credit cards as authorized users. When I graduated high school, I had a 700 credit score and over 15 yrs of positive credit history.
Your credit history is 15% of your credit score and is by far one of the most important credit factors.
I didn’t understand the importance of this at first but later on in life I did. Til this day, my mother’s credit card is still on my credit report and no matter how bad my credit had gotten, my lengthy credit history always remained.
My children are 10 and 4 yrs old and have almost ten years of positive credit history!
Also know that the 2009 Card Act states that you must be at 21yrs old or have study income to even apply for a credit card. I believe it to be much easier and less of an headache to just add your child on to your card instead of being a co-applicant for him or her.
Not all credit card issuers report authorized users to the credit bureaus and some have an age limit. Check with your credit card issuer before choosing to add your child.
‼Remember ‼If you choose to add your child on to credit card as an authorized user and your credit card issuer reports your credit history on to your child’s credit report.
Remember, no matter at what age you add your child to your credit card, the credit card issuer will report ALL of the history from the time you had the card.
Everything that you’ve done and do going forward WILL be reported to their credit report! So be sure that you take care of that card!
Most important, when the time is right, have a discussion with your child/children about the importance of credit, debt, and finances. Allow them to see you pay bills, count money and talk to creditors. Get them familiar and comfortable with that. Once they start paying bills, that doesn’t stop. 😩 Create fun money games and teach them how to manage their allowance. I started this with my children when they began pre-school and you’d be surprised at how fascinated children are.