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Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


09Lexie wrote:
I believe Crashem thought he/she was applying for cards. So, 'pick' the right cards. If you are adding him as an AU only that would be a non-issue.

To help him/her build credit if you have an Amex-start there IMO. Can't go wrong with backdating, monitoring of CL's etc.

I was actually referring to both.

 

If terms of cards to make him/her AU on. You need to be a bit careful, but the goal is 2-3 accounts.

 

1) Obviously don't pick any cards with any negative history on them.

2) Low Reported Utilization: Make sure you understand what I mean by reported utilization.  You don't want the AU's utilization to be affect by your normal spending as they likely won't have the card portfolio you have.  Picking little used cards or cards where reported balances are fraction of limit are good.  To give you an example, imagine you add your relative to 3 cards (5k, 5k, 25k) cards while you have cards totaling 100k of credit.  If you have reported balances of around 20k on the 25k card, your utilization will only be 20%, but your AUs utilization will be over 50% and take huge FICO hit.  Worse since they can't control what is reported as it isn't their card.

3) The older the card the better.  It will help with AAoA and oldest history.  Doesn't matter what kind of card.  Old is good

4) Higher limits: If you have cards over 5k, those are good to add as 5k is often times hard limit to break and having any cards (including) AU cards report over 5k is helpful

5) AMEX: If one of the cards is an AMEX, it is great idea to add.  The main reason is to get their member since date set.  The secret to make sure this happens is to take the new AU card and register it with a new AMEX online ID for your AU and log in at least once.  This will lock in their member since date to that online id which they can use in the future.

 

 

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Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


WhiteCollar wrote:

She will begin college early next year. She does have  apart-time job but of course it's paltry pay.


Cool.  I would add her as AU now.  I would let accounts report for a bit.  When she officially enters school and has the job, she should app for Discover for Students, Capital One for Students, Walmart card, and maybe one other student card (BofA, Citibank, and lots of CUs all have student cards).  Try and stay with cards that will either grow with you or have no AF so no harm in keeping open.  After 6 months to 1 year of new student cards, then I recommend apping for AMEX revolver herself (one without AF).  She will probably only have one inquiry (from Cap One) on Experian which AMEX usually pulls.  Likely have FICO in the mid 700's.  AMEX and Walmart will be vehicles to building up her limits given AMEX and GEMB have credit friendly CLI policies.

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Regular Contributor
Omnipotent
Posts: 157
Registered: ‎06-22-2013
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Re: Help with building credit for 18 year old

She only needs 1 card to get her into primeville. She can always pick a credit card and a store card if she shops at a particular place often. 

Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


Omnipotent wrote:

She only needs 1 card to get her into primeville. She can always pick a credit card and a store card if she shops at a particular place often. 


Nah.  You want a decent portfolio of cards to build your AAoA on.  Now if the person can't handle their credit, probably recommend getting the minimum.

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Blogger
HiLine
Posts: 2,949
Registered: ‎10-19-2012
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Re: Help with building credit for 18 year old

For credit education, I think that having your own card is the best way to learn. An authorized user account doesn't replace a proprietary account in credit building - at some point in the future an authorized user account may be eliminated from credit scoring. A secured credit card sounds like the safest way to start with controled risk - the loss is limited to the colateral deposit.

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Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


HiLine wrote:

For credit education, I think that having your own card is the best way to learn. An authorized user account doesn't replace a proprietary account in credit building - at some point in the future an authorized user account may be eliminated from credit scoring. A secured credit card sounds like the safest way to start with controled risk - the loss is limited to the colateral deposit.


I agree.  But it isn't the way to build the best portfolio credit wise that is.

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Blogger
HiLine
Posts: 2,949
Registered: ‎10-19-2012
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Re: Help with building credit for 18 year old


Crashem wrote:

HiLine wrote:

For credit education, I think that having your own card is the best way to learn. An authorized user account doesn't replace a proprietary account in credit building - at some point in the future an authorized user account may be eliminated from credit scoring. A secured credit card sounds like the safest way to start with controled risk - the loss is limited to the colateral deposit.


I agree.  But it isn't the way to build the best portfolio credit wise that is.


Baby steps bro. It's sub-20 year olds that we're talking about here ... Heck, they can't even drink alcohol yet! :smileylol:

Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


HiLine wrote:

Crashem wrote:

HiLine wrote:

For credit education, I think that having your own card is the best way to learn. An authorized user account doesn't replace a proprietary account in credit building - at some point in the future an authorized user account may be eliminated from credit scoring. A secured credit card sounds like the safest way to start with controled risk - the loss is limited to the colateral deposit.


I agree.  But it isn't the way to build the best portfolio credit wise that is.


Baby steps bro. It's sub-20 year olds that we're talking about here ... Heck, they can't even drink alcohol yet! :smileylol:


You sure about that last statement?

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Blogger
HiLine
Posts: 2,949
Registered: ‎10-19-2012
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Re: Help with building credit for 18 year old

[ Edited ]

I was joking about that lol . Though yeah, legally they can't :smileywink:

Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012
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Re: Help with building credit for 18 year old


HiLine wrote:

I was joking about that lol . Though yeah, legally they can't :smileywink:


Yeah legally...

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