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Credit score for a minor?

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Anonymous
Not applicable

Re: Credit score for a minor?


@Jazzzy wrote:

We have had our daughter on our cards since she was 15. I think we had one card that wouldn't take anyone under 16...so we waited with that one. So, she had a nice credit score on her 18th birthday. We then had her apply for a student card (with my husband on it as well), so now she has a PenFed 5% gas card with a $1,000 limit. She also has a subsidized school loan on her report now.

 

The one thing we never mentioned to her was to NOT take the offers for the store cards in the stores she uses. I think she apped for an American Eagle card at one point for the discount they were offering, and we told her we didn't want her apping for the store cards. I think a wallet full of store cards gets tough to keep track of.

 

That's where the kids get snagged these days...American Eagle, Buckle, Victoria's Secret, etc.


My parents told me not to do this, and my girlfriend's parents didn't.  We both only had one CU credit card for the past 7-10 years.  She applied for two or three store cards to get a 25% discount for one purchase freshman or sophomore year of college (~10 years ago), paid off the cards, and then never touched them again.  I never did that. Now that we applied for a couple new cards, her score is over 800 because her AAoA can take more hits and mine is only in the 700s.  Store cards aren't always bad if you understand not to spend money you don't have.

Message 21 of 37
Anonymous
Not applicable

Re: Credit score for a minor?


@Anonymous wrote:

My parents told me not to do this, and my girlfriend's parents didn't.  We both only had one CU credit card for the past 10 years.  She applied for two or three store cards to get a 25% discount for one purchase freshman or sophomore year of college (~10 years ago), paid off the cards, and then never touched them again.  I never did that. Now that we applied for a couple new cards, her score is over 800 because her AAoA can take more hits and mine is only in the 700s.  Store cards aren't always bad if you understand not to spend money you don't have.



I think both situations are right really.  Your score in the 700s is very good, and you had little risk.  Her score may be great, but a lot of 18 year olds would not have been responsible with those store cards and ended up ruining their credit.  I would probably advise my kid to stay away from them just because there is so much risk involved.  When I was 18, or even like 22, I was super irresponsible financially, even though I was very responsible in most other areas of my life.  Sometimes at that age, I didn't realize the lasting consequences I would have from that.

Message 22 of 37
Anonymous
Not applicable

Re: Credit score for a minor?

I think if your kid has the self-control to not open the store card in the first place, your kid would also have the self-control to use it once for the discount and then SD the card forever.  If my girlfriend had been told not to open those cards, she wouldn't have, and her credit would be worse.  If I hadn't been told that, my credit would be better. I was under the impression that applying for credit permanently marred your score or something.

 

Both of us had a very good understanding that paying credit card interest is profoundly stupid, so we were never at a risk of borrowing money on any card.

Message 23 of 37
navigatethis12
Valued Contributor

Re: Credit score for a minor?

I think it is a good idea to add children as authorized users. Me and my dad have the same name, even though I put Jr and he puts Sr, the credit agencies still always put his accounts on my report as well. It made my scores outrageously high at 18. However if a manual review is done, the creditors I have dealt with don't acknowledge the authorized user accounts. If it's an instant decision though I usually get a good outcome.

 

 


@Anonymous wrote:

If my girlfriend had been told not to open those cards, she wouldn't have, and her credit would be worse.  If I hadn't been told that, my credit would be better. I was under the impression that applying for credit permanently marred your score or something.

 

Both of us had a very good understanding that paying credit card interest is profoundly stupid, so we were never at a risk of borrowing money on any card.



I often read not to open store cards because it would really hurt your score. Macy's was offering 15% off that day and the next day. I was 19, didn't know much about credit but wanted the discount. I was approved and used it mostly every month and paid it off as soon as the bill came. Now, two years later I'm glad I did open it because it's two years of history that I gained by ignoring what I had read. I think store cards are really good if you shop at the store often enough. The Macys Amercian Express card even gives rewards for shopping there. I think they get a bad reputaiton because of high annual percentage rates. But if you pay the card off every month it doesn't matter.

Message 24 of 37
Creditaddict
Legendary Contributor

Re: Credit score for a minor?


I often read not to open store cards because it would really hurt your score. Macy's was offering 15% off that day and the next day. I was 19, didn't know much about credit but wanted the discount. I was approved and used it mostly every month and paid it off as soon as the bill came. Now, two years later I'm glad I did open it because it's two years of history that I gained by ignoring what I had read. I think store cards are really good if you shop at the store often enough. The Macys Amercian Express card even gives rewards for shopping there. I think they get a bad reputaiton because of high annual percentage rates. But if you pay the card off every month it doesn't matter.



That's exactly what happens... Hey I have revolved my balances at some TERRIBLE! Rates but if it's a store card and not some card before card act like Citi that launched people to 29.9 with no warning I have not complained at those rates... I have Hate/Love relationship with Macy's but the fact is if you shop their any good amount of time you would be throwing money away not to get the card, they almost ALWAYS give you 10-20% off for using your card.  Express is very similar (they will allow multiple transactions to use the coupons that are text or emailed to you, I have walked out with $800 worth of stuff for like $350 before!!! it takes some time and I try to get organized before I go in and if possible during week!

If the card would save you I would open it!

Message 25 of 37
FrugalRican
Blogger

Re: Credit score for a minor?

I think the stigma related to store cards is that you kinda don't want to show up to a lender with your credit history looking like:

 

Hooters, Macy's, Kohl's, Walmart, Target

 

Other than that, they are credit cards just like any other and serve their purpose. But a lot of people seem to think that just because they are store cards, it's okay to charge it now and pay 30% later... for some ungodly reason.

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Message 26 of 37
navigatethis12
Valued Contributor

Re: Credit score for a minor?


@Creditaddict wrote:


That 20% plus cashback sites (Ebates is 6%) right now, plus a 2% cashback card or the Macys American Express 3% is awesome. I got 29% off today and free shipping. If I didn't have the card I would only have gotten 6% and free shipping.


@FrugalRican wrote:

I think the stigma related to store cards is that you kinda don't want to show up to a lender with your credit history looking like:

 

Hooters, Macy's, Kohl's, Walmart, Target


Up until December last year I only had Macys and Amazon card in my name. Perfect payment history and never over my limit. Most of the creditors I talked to treated them like regular cards. However one told me that they didn't count because I could only use them at the store, as if that means you can't default on it. I think it is unfortunate if creditors look down on people with just store cards. You have to start somewhere. To me they are no different than a card you can use everywhere.

Message 27 of 37
CreditScholar
Valued Contributor

Re: Credit score for a minor?

Store cards are generally seen as lower forms of credit because it often says something about the person who has them. They're easier to get because the store wants you to buy their stuff. There is a built-in profit margin on the goods or services they sell, so in theory they can take on riskier people because of that extra margin. Also people who sign up for credit cards because of an in-store discount indicates an impulsive shopper/consumer. A conservative CCC like Amex or Chase will likely see that behavior as negative, since impulse driven people are less likely to be responsible with their credit. Call it what you like but store cards are lower forms of credit. People who have several store cards (especially with low limits) typically have inferior credit records. Period.
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Message 28 of 37
webhopper
Moderator Emeritus

Re: Credit score for a minor?


@Anonymous wrote:

@Anonymous wrote:

My parents told me not to do this, and my girlfriend's parents didn't.  We both only had one CU credit card for the past 10 years.  She applied for two or three store cards to get a 25% discount for one purchase freshman or sophomore year of college (~10 years ago), paid off the cards, and then never touched them again.  I never did that. Now that we applied for a couple new cards, her score is over 800 because her AAoA can take more hits and mine is only in the 700s.  Store cards aren't always bad if you understand not to spend money you don't have.



I think both situations are right really.  Your score in the 700s is very good, and you had little risk.  Her score may be great, but a lot of 18 year olds would not have been responsible with those store cards and ended up ruining their credit.  I would probably advise my kid to stay away from them just because there is so much risk involved.  When I was 18, or even like 22, I was super irresponsible financially, even though I was very responsible in most other areas of my life.  Sometimes at that age, I didn't realize the lasting consequences I would have from that.


I opened a Discover card 2 months after my 18th birthday in 1999... I just wanted the free t-shirt...  I also opened a Citi card at that time...   I had both of them sent to my moms house and she sock drawered them for me... I forgot about them Smiley Happy   Fast forward to 2006...   my credit is shot cause my ex husband was a deadbeat and stopped paying on the truck that I had cosigned for back when we were married.   He also maxed out my CC as an AU, and I got stuck with the bill... He cleaned out our joint checking account, so I had no money to pay for the bills... He was abusive and by the time we split, I was in therapy with no job...   Needless to say, the truck got repoed, the Credit Cards I had in my name all got closed by the grantor... EXCEPT, you guessed it, Discover! 

 

When I finally got my head back together and in the right state of mind... 3 months later... I got to start cleaning up the mess.  I had to move 800 miles away for the new job, and I needed new work clothes.  I had a car and a place to stay, but I had no clothes to speak of to wear in an office environment. I was asking my mom what to do, and she went in, bless her heart, she got that Discover card out, and told me to use it to get me started on some work clothes.  The limit was 1k... I went to wal mart and got 5 outfits that could be worn in an office... and I started paying off all my old accounts with my new paycheck... it took a lot of effort, but they were all paid, and all of them removed the lates except for Wells Fargo CC. The repo was on my account... I was silly back then and I wouldn't settle with Citi Financial on principle (It wasn't my truck!!)   They got a judgement and started garnishing my wages in 2007.   I paid them off in 2009.

 

The fact that I had that Discover card sitting in my mom's sock drawer was a life saver. It was the only account that wasn't completely closed and ruined. I was able to rebuild.... I got my first home in 2008 with an FHA loan. I got a new car in 2009 with volvo financial (18%)... paid it off in 14 months using a 401k loan  I got a used 4X4 truck in 2011, paid off yesterday with my bonus....  got a new home in Feb, converted the first home to a 100% rental... it was an owner occupied duplex when I bought it. 

 

I was able to re-activate another store card opened from 2003 that had been cut up after I got it.   So between the Discover, and the JCPenny card there is a combined 22 yrs of free history. As you can see, Discover grew with me, even though it was in the SD for 7 yrs.

 

 

Long story short... Its not a bad thing to have some accounts opened as a kid and sock drawered or cut up right away... As long as there is no AF, the card  isn't hurting anything and can really help them get a fresh start with credit if they ever need one.

 

I plan on adding my daughter as an AU on my AMEX account shortly... She will not get a physical card. But I'd like to know that she has a card in her name just in case I need her to go get something for me in an emergency. AND it will help her get started with credit!

FICO 9:
Filed Chapter 13 on 6/1/2017 after job loss. Discharged 6/1/2022.

Goal: Gardening!


Message 29 of 37
Anonymous
Not applicable

Re: Credit score for a minor?

The only thing that sucks now webhopper, is if someone sock drawers a card for that long today, it is cancelled.  I'm not sure that any company would let a card sit around for 7+ years without being used any more.

Message 30 of 37
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