How Do I Help My Child Start Their Credit History?

Naturally, parents want to give their children every advantage possible in life. You can give your son or daughter great advice on how to handle money but, unfortunately, you can’t pass down your credit history. This is something that is built by good habits, hard work and time. And even though you won’t be able to wrap up this special thing, put a bow on it and hand it over on their 21st birthday, there are things that you can do that will make your child’s financial journey a little easier.

Checking Their Credit History

GHow Do I Help My Daughter Start Her Credit History?

The first thing that you’re going to want to do is show your child how to look up their credit report from the three national reporting bureaus: Equifax, Experian and TransUnion. Everyone is entitled to do this for free every 12 months. After you receive the documents, sit down and go over them together.

Explain what each part of the report means. Most likely, your child will have little to no established credit, so there probably won’t be much to look at, but you can explain what parts make up a credit report and what to look for in the future. Consider showing them your credit report if you feel comfortable doing so. You should also talk about how there may be some variation between the three reports.

You should also look for signs of identity theft. If there are delinquent accounts that show up on one or more of your child’s credit reports, and they have never actually opened an account, this could indicate that they have unknowingly been the victim of identity theft. And while this news may be troubling, it’s much better to find this out sooner as opposed to later. If you discover that fraudulent activity has occurred, you should make an immediate report and walk your child through the correction process.

Be sure that there are no other kinds of mistakes. Some studies have indicated that there are significant errors on about 20% of existing credit reports. Help your son or daughter make sure that everything looks accurate on each of their documents. If you do find a mistake, let them know that there is a correct procedure involved in reporting the error to the bureau. If you aren’t entirely certain about the process, this will be a good opportunity for the two of you to learn together.

Establishing A Credit History

Once you have determined that your child is starting with a clean credit slate, you may choose to do or suggest a few things to help them start establishing a strong credit history. Here are a few suggestions:

  • Getting a secured credit card. These are easier to get than unsecured cards because they require a cash deposit and the amount of this cash deposit will be the initial credit limit on the account. Provided they make on time payments, getting her a prepaid credit card can be a safe introduction.
  • Make your child an authorized user on an account that you have. This is only a good option if you have good credit yourself. If this is the case, your good credit will boost their credit score. Just make a mutual agreement that your child will be responsible for whatever they spend.
  • Getting a store credit card. These lines of credit can typically only be used at the issuing store, so they are usually easier to get than general purpose cards. The only drawback is that these cards tend to carry very high interest rates. So, make sure that your child knows that the card should be used sparingly and that it is in their best interest to pay at least the minimum amount owed on the account every month.

Another Option

If you are interested in getting your son or daughter started in the world of credit and making sure that he or she has reliable transportation, why not co-sign for an auto loan? At Auto Credit Express, we can help you to get reasonable financing for a safe and dependable car. And it’s easy to get the process started. Just fill out our quick and secure application and you’ll be on your way to building a great credit future for child!

Posted on November 3, 2014 by in FICO score
Reader Comments

Comments are closed.

Apply Online Apply on Phone Search