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Established Member
tidbit
Posts: 19
Registered: ‎09-16-2007
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Establishing credit for my daughter

My daughter is 17 and will be 18 in May.  My husband and I currently have an auto loan in our names but the car is hers - she makes the payments, pays the insurance, etc.  I realize that her making payments to a loan that is not in her name is irrevelant to her credit report.
 
Our goals are when she turns 18, she wants to re-finance the car in only her name - or with her as the primary and me as a co-signer if she has to have one. She has her own bank account (checking AND savings). She works a full time job and goes to school. I have discussed this with my banker and am hoping that we can get the auto loan with them when the time is right - and hoping that her making the payments from her bank account will have some bearing on the approval of the loan.
 
My question is this..   I know that the higher her credit score, the better the interest rate - but she can't get any sort of credit until she is 18.  If I add her as an authorized user on one of my cards (with a long time excellent history), will this boost her credit score now even though she's not 18?
 
Thank you for your time.
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MeganML84
Posts: 388
Registered: ‎09-06-2007
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Re: Establishing credit for my daughter

If the card is in good standing, than theoretically it will help her score. However, AU status will not help in terms of Fico scoring starting next year.
 
I think there are other posters out there that have experience with this though...
Wisdom doesn't automatically come with old age. Nothing does - except wrinkles. It's true, some wines improve with age... but only if the grapes were good in the first place.
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CreditBob
Posts: 493
Registered: ‎05-01-2007
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Re: Establishing credit for my daughter

Last month Fair Isaac Corporation started no longer allowed authorized account users as being part of the fico score. Shw has to wait until she is 18 in order to be able to start the credit process. The only thing that you can do is if the creditor on the auto loan or another creditor will allow you to reifnance that the car. You will have to be a cosigner for her because of the fact that she has no credit. Also, as soon as she turns 18 have her go to her bank or credit union and get a visa credit card. Revolving accounts impact the fico score the most. Also before I forget, if they are will to allow a refinance with the car, then have her go as long as she can as far as making payments. She should not pay on a vehicle for less than 4 years. It takes 4 years of payments for any account to become well established. Any account is considered new until it reaches 12 motnhs (1 year) worth of payments.
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Establishing credit for my daughter

[ Edited ]
I'm still getting length of credit history points from my AU status on DH's Discover. The longest-account history still shows as 18 years, and I still get the happy comment about established credit history, which I didn't get before being an AU. They have pushed back the change in treatment of AU status. This won't last much longer though--I keep reading that it goes away sometime in 2008..
 
Since she's still under 17, I don't know if it will help her, though. I doubt she'd get a lot of points for length of credit history (having credit since age 8 or whatever), and the same might apply with the overall good history and low util. (I am assuming your balance remains under 10%, or at least under 30%.)
 
edit: I meant to ask, have you ever pulled her FICO scores? (Make sure that they say FICO.) You'd be surprised at how high a number young people start at. I think all three of my kids started at 700 once they'd had some sort of card for 6 months. They haven't had the chance to screw up yet! :smileywink:


Message Edited by haulingthescoreup on 10-15-2007 09:33 AM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Established Member
tidbit
Posts: 19
Registered: ‎09-16-2007
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Re: Establishing credit for my daughter

Thank all of you for your information.  She is going to get a cc as soon as she turns 18. I have instructed her on how she is to handle the cc to get her score up. If we need to wait a few months to get the score up before we refinance the car, we will.  
 
My husband added me as an AU on this same card and it boosted my score - so I wasn't sure if it would help her.
 
To the last poster - no, I haven't pulled her FICO yet.  I am going to wait until next month to make sure the AU would show up and see if it has impact on her at all. I will pull it again when she turns 18 to see where we stand. I want her to be at least 700 before we apply for the auto loan.
 
My parents didn't teach me these things - so here I am at 39 and have been working for the past couple of years to really improve my scores (and they are consistantly going up). I want all 5 of my children to learn before they are out on their own how this FICO stuff works and how important it is.
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masdeocho
Posts: 2,050
Registered: ‎04-17-2007
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Re: Establishing credit for my daughter



CreditBob wrote:
Last month Fair Isaac Corporation started no longer allowed authorized account users as being part of the fico score...


Not exactly correct. They said they will change the formula for one CRA by the end of this year. Which means it could happen in another year's time, or even never.  So I don't think there's any risk in adding AUs now.
 

She should not pay on a vehicle for less than 4 years. It takes 4 years of payments for any account to become well established. Any account is considered new until it reaches 12 motnhs (1 year) worth of payments.

I have never heard of this.  I had a 3-year loan and I think it worked out for me.  And it makes no sense to take a longer term and pay more money just to try to get a better credit score.

 
-----------------
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9.4.2011: TU 805. EQ 815.
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MidnightVoice
Posts: 8,158
Registered: ‎03-25-2007
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Re: Establishing credit for my daughter



masdeocho wrote:


And it makes no sense to take a longer term and pay more money just to try to get a better credit score.


Did I hear snowballs mentioned?  Wasting money on interest seems to be a Dave Ramsey speciallity!
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid

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