Building a child's credit score

**Like2Plan** · 07-30-2013, 06:19 AM

Originally posted by Barclay View Post

HOWEVER, I just recently learned that adding someone to a credit card as an authorized user can increase a credit score. I tried adding them to my Discover card (the oldest account I have) but Discover didn't even ask for a social security number. I did more research and Discover does not report to the credit bureaus for autho. users.

Does anyone have any information on this?

Barclay,
That used to be the case, but I don't think it is anymore.

**disneysteve** · 07-30-2013, 06:25 AM

Originally posted by Barclay View Post

She doesn't want a credit card

Has she said why she doesn't want a CC? I think teaching responsible use of credit early on is vitally important. Have her get a card and use it only for specific things like gas perhaps if she has a car or transportation if she gets a bus pass or a recurring bill like her cell phone. Make sure she never charges more than 30% of her credit line and that the bill gets paid in full every month on time.

Does she have any student loans? If so, keep in mind that those are helping build her credit too.

**Barclay** · 07-30-2013, 06:47 AM

oops.

**Barclay** · 07-30-2013, 06:53 AM

That is pretty much where i was going as well. I thought she could get a card and just charge her gas like she does with her debit card and just pay it each month. She is on board with that idea. She initially said she didn't want to pay a credit card. But, after I explained that they send you a bill for everything you bought and they do NOT charge you extra unless you don't pay, she seemed to be more receptive. She thought that it costs more with credit. She is my frugal child. She uses coupons for everything and doesn't spend money ever. She puts snacks and bottles of water in a cooler in the backseat of her car. It's the other daughter that I have to worry about!

She doesn't have student loans or any bills in her name. She really has nothing at all in her name other than a savings and a checking account.

**safari** · 07-30-2013, 07:26 AM

Look into student credit cards. Discover also has one, https://www.discover.com/credit-card...ent/index.html. Student credit cards have lower income requirements and some allow scholarships and financial support from parents to be counted as income for qualification purposes. If her income is still too low to qualify, a parent can co-sign the application.

**MonkeyMama** · 07-30-2013, 07:35 AM

Yeah, we both built our credit with credit cards in our high school years. I think it's really the easiest avenue. & if she fears the credit card, I think she can manage it just fine. It doesn't sound like she is going to have responsibility problems with it. It's good to learn that a tool like a credit card shouldn't really be feared. It's all in how you use it.

I think just using to pay for gas at the gas pump would be a simple plan. Eventually, she may want to get rent and utilities in her name, too. I don't remember having any trouble getting utilities in my name when I was a college student - already had some credit built up with the credit cards.

**ctigers0714** · 07-30-2013, 07:38 AM

Originally posted by disneysteve View Post

Make sure she never charges more than 30% of her credit line and that the bill gets paid in full every month on time.

I pay my credit card off in full every month but I use way over 30% of my credit line (probably around 60-70%). Is this hurting my credit score?

**disneysteve** · 07-30-2013, 07:42 AM

Originally posted by ctigers0714 View Post

I pay my credit card off in full every month but I use way over 30% of my credit line (probably around 60-70%). Is this hurting my credit score?

Yes, it probably is. One factor in your score is your credit utilization ratio - the percentage of available credit that you are using. The standard advice is to not exceed 30% utilization.

**4theluvofgold** · 07-30-2013, 02:44 PM

The 30 percent also matters on if you pay before the statement date. There is the Max balance though which varies by card issuer. Some do the Max balance of any time, or the Max statement balance.

Make sure it is less than 30 percent before the statement date. That is the critical point when the numbers go through their process.

I agree with disneysteve. I use my cards for already known expenses that I would pay for anyway. Gas, phone bill, Electric bill and so forth. Nothing I wouldn't have already had to pay for.

Then I go to my online banking, I have my receipts, and make a payment in 3 days electronically for the purchases that day. Gives them time to post, requires no postage and I'm not in debt.

**hamchan** · 07-30-2013, 05:03 PM

My husband had never had a loan or credit card to his name before we got married. He kept getting denied credit due to having no score. I added him as an AH to my Capitol One card and he started getting offers from Capitol One within three months, and was approved. They did ask for his social when I signed him up.

This was earlier this year too, BTW. Not a long time ago.

**Jerry91** · 07-30-2013, 10:19 PM

Well, your twin daughters could start off with secured cards. They are available at low fees. It will require her to deposit a cash amount in her account and she will be able to charge up to that amount. Time to time she can add more to the deposit to increase the available credit in that account.

**4theluvofgold** · 07-31-2013, 12:49 AM

Avoid secured cards. Capital One is friendly beginner card. Credit One as well. They will help with starting credit then move on to better cards.

**4theluvofgold** · 07-31-2013, 12:52 AM

I should modify my statement. If it is a graduated secured card it would be OK.

Capital One secured.... you don't get the money back till you close the account. Many are like that. Make sure they can unsecure with good payments.

**txex86** · 08-02-2013, 06:20 PM

Add your daughters as authorized users on one of your credit cards that you have a good relationship with and pay off every month. Contrary to what has been posted above, this does create a favorable credit history for your kids. We did this for our daughter and it had worked out well for her.

Building a child's credit score