topic Re: ...uh, add my 5yr old as an authorized user? in Credit Cards

...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 16:44:30 GMT

Went to the credit union this past Saturday with my 5yr old son in tow. Created a custodial bank account for him with the contents of his piggy bank ($90). Plan to dump a piggie into the account every year (until 18th birthday) as well as put in about $20 per month myself. The goal is to have about $10,000 by the time he's 18 for him to start a little "business" or pay for his own used vehicle, college stuff, etc.

The time in the bank got me thinking about the following: get a $500 secured card from the credit union (interest-bearing deposit, no closing due to inactivity), put him on it as an authorized user, and then sock drawer it (forever). The thinking is to build a credit history for him so that when he's 18 he'll be able to benefit from it. (Maybe I'll stir the card once a year or so with a single xmas gift for him just to show activity of some kind...)

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18? Like, a deeper, more tangible history from actually adding him for years, rather than just waiting till later...?

------plan-----

5yrs old, credit union custodial savings account

5 yrs old, authorized user of $500 credit union savings secured card (sock drawered card - for eternity...)

When 18, apply for his own savings secured card from credit union (card in his possession)

When 18.5, apply for $500 savings secured loan (for his "business") from credit union, transfer funds to my account and autopay it back (he does not have access to funds)

Re: ...uh, add my 5yr old as an authorized user?

Indycoltsfan — Tue, 09 Jun 2015 17:15:50 GMT

There is a minimum age to be an AU - some cards are 15, others are 18. You may want to check with your CU.

Re: ...uh, add my 5yr old as an authorized user?

Callandra — Tue, 09 Jun 2015 17:18:54 GMT

^Agreed -- I would check with your CU on the age requirements for an AU and also how long the card can be inactive and they close it/refund the money. You could just add him to one of your other cards; you don't necessarily need to open a new card and add him to that as an AU but again, you might want to check to see the age requirements.

Re: ...uh, add my 5yr old as an authorized user?

vanillabean — Tue, 09 Jun 2015 17:42:14 GMT

@Anonymous wrote:

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18?

No.

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 18:55:23 GMT

I recently added my twins to a couple of my cards (they are 10), however it was to allow them to have a means to pay for things while skiing while still having the protections of a credit card. I have also used it to help introduce them to the world of credit and start to teach them how things work, like bills and paychecks and such.

My Visa's, MC's and Discover did not have a minimum age, however Amex does so they could not be added to those cards. They each have two cards in their names. However had there not been the need for them to pay for things without me around I doubt I would have worried about it till they actually had a need.

Re: ...uh, add my 5yr old as an authorized user?

jason86423 — Tue, 09 Jun 2015 20:11:02 GMT

Capital One was my go to for this. I added them to my account as Au's when one was 6 and the other was 4

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 20:16:51 GMT

YES! Absolutely add your son as an AU for your cards. Add him to as many cards as you can. When he's eligible to be added to more cards, add him to those cards as well.

By the time he turns 18, his AAoA will be better than most 25 year olds. If he gets into credit cards as a hobby, he'll already have an established credit profile and will be able to add multiple cards without damaging his AAoA.

My father added me as an AU when I was 6, again at 22. Those two cards are the sole reasons I'm able to have such a great line of cards at my disposal. You'll be helping him along TREMENDOUSLY, and if he's responsible with his credit he'll thank you for it.

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 20:18:00 GMT

@Anonymous-own-fico wrote:
@Anonymous wrote:

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18?

No.

I disagree. AAoA is a big factor in your overall credit journey. By building this as an adolescent, you will have a thick file by the time you're ready for your own lines of credit.

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 20:23:58 GMT

Hmm you learn something new everyday. Me and the DH were just talking about how we want our children (7 and 3) to be knowledgeable about credit at a young age (teens) so that they have a better start then we had at adulthood. Now that I know this I will be speaking to the banks to see when we can add them on. I will still prob wait until we are fully rebuilt (only 10 months into our credit journey) before they get added to anything. I think this is just another great way to set your children up for success as long as you are responsible (which I believe many of us are).

Re: ...uh, add my 5yr old as an authorized user?

vanillabean — Tue, 09 Jun 2015 20:33:29 GMT

@Anonymous wrote:
@Anonymous-own-fico wrote:
@Anonymous wrote:

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18?

No.

I disagree. AAoA is a big factor in your overall credit journey. By building this as an adolescent, you will have a thick file by the time you're ready for your own lines of credit.

So you are saying that if the same cards are added when you are near eighteen, your file is thinner?

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 20:59:38 GMT

@Anonymous-own-fico wrote:
@Anonymous wrote:
@Anonymous-own-fico wrote:
@Anonymous wrote:

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18?

No.

I disagree. AAoA is a big factor in your overall credit journey. By building this as an adolescent, you will have a thick file by the time you're ready for your own lines of credit.

So you are saying that if the same cards are added when you are near eighteen, your file is thinner?

Yes, your file will absolutely be thinner. In terms of payment history, his child would lose 13 valuable years of repayment history on a card if he is added when 18 as opposed to today. If he is added as an AU today, when he turns 18 he will have 13 years of AAoA. Adding 2 more cards will bring him down to 6.5 years. If he's added as an AU at 18, his AAoA will be 0 and he may not qualify for 2 decent credit cards.

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 21:05:27 GMT

This whole thread got me excited. I thought hmm...Guess I better jump on this bandwagon. In my daydream, I saw in the future, a 18 year old child with a credit score of 830. Lol.

I would say possibly maybe you have had some credit issues, or you know someone who has, and you want them to not have sub prime rates stuffed down their throats? I think you may be worrying about the situation too much. It is SUPER SUPER easy to build credit when you are young, as long as you actually get some accounts/cards/etc. My problem was waiting wayyyyyy to long to get credit cards and a invalid remark on my report. Instead of paying legal fees, in one year I have rebuilt my credit thanks to lurking at myfico and credit karma.

Others can chime in on what specific things besides credit cards can be utilized...maybe a small loan or get a car and cosign it.

The fact is, kids are kids. They don't always learn, or do what is responsible. I guess I read that more folks are having a harder time getting loans/cards/etc. The amazing thing is, there is forgiveness. There are forums like this. The whole credit system, to me, is a farce. As long as you play by their rules, and joing myfico, all will be well.

Instead of giving them AU on a credit card I would buy them a myfico Gift card for credit monitoring LMAO

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 21:10:11 GMT

I had read if the card provider does not allow 'backdating' (which is becoming a more prevalent policy) then the child's account does not get the full age of the card added in to AAoA. Just the date that the card was added to their account.

Thanks to all for the dialogue!!!

http://www.creditcardideas.com/blog/adding-an-authorized-user-to-increase-credit-scores

Re: ...uh, add my 5yr old as an authorized user?

vanillabean — Tue, 09 Jun 2015 21:11:00 GMT

@Anonymous wrote:
@Anonymous-own-fico wrote:
@Anonymous wrote:
@Anonymous-own-fico wrote:
@Anonymous wrote:

Is there any benefit to starting him as an authorized user now, rather than just adding him when he's 18?

No.

I disagree. AAoA is a big factor in your overall credit journey. By building this as an adolescent, you will have a thick file by the time you're ready for your own lines of credit.

So you are saying that if the same cards are added when you are near eighteen, your file is thinner?

Yes, your file will absolutely be thinner. In terms of payment history, his child would lose 13 valuable years of repayment history on a card if he is added when 18 as opposed to today. If he is added as an AU today, when he turns 18 he will have 13 years of AAoA. Adding 2 more cards will bring him down to 6.5 years. If he's added as an AU at 18, his AAoA will be 0 and he may not qualify for 2 decent credit cards.

So you are saying that for any card that you are added to, you inherit no history from it at that time?

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 21:56:36 GMT

I see both positives and negatives to doing this. My biggest concern would be having an 18 year old with access to credit lines that only a mature adult should have. I remember being in college at 18 and having credit cards handed out like candy. Luckily they only gave me a $1,000 line of credit which was easily paid off and my lesson was learned. Now think of a teen with a 15k - 25k credit line......might be a much harder pill to swallow. I get giving the kids a boost, but I would say be very cautious once they start using those thick credit files to obtain higher limits.

Re: ...uh, add my 5yr old as an authorized user?

amakol — Tue, 09 Jun 2015 22:06:48 GMT

This will help with computer applications but any manual review would immediately ignore it.

The credit reports already had a "file indicates credit may have been established prior to age 18" statement on it when I had my parents' AU card removed a couple years back. It wouldn't be tough for an underwriter to spot even without the statement and almost all I talked to said they ignored the account when I called in.

There's no saying how things will be in 13 years but with all things following the trend of being more detailed and loopholes always closing, I would be surprised if there was any benefit to an AU account from age 5 in 13 years with even computer apps as I believe the systems will catch up. There's already little benefit when talking to a person.

I'd also question the true gain of doing this. Unless your son will need a great credit history at 18-21 for independent purchases, the difference from adding him as an AU at 15 or 18 or something more appropriate will be negligible by the time he's 23-24. I started around 18 and was in excellent shape by 25.

Re: ...uh, add my 5yr old as an authorized user?

newhis — Tue, 09 Jun 2015 22:20:19 GMT

With all the changes with Amex (no backdating), Discover (CLIs every 16 days), Chase (denials for getting 4 cards in 2 years), we shouldn't worry about giving AUs to kids to build history. Imagine all the changes to credit history/scoring that will happen in 5, 10, 15 years.

I'm learning the rules on this 'credit game' in the USA. For me it is weird that you can add someone as AU and the open date will show the same as the main cardholder, and all their payment is reported even if the AU doesn't use/pay the card. I mean, is great to boost someones credit but it is weird that this happens.

My DW and I, were able to build credit in USA from no score to have over 740 ficos in less than a year, starting with a secured card and a regular card. I believe we only need an auto loan or mortgage and a few years of credit history to be 800. So really, what is the point of having credit history before being 18 years old?

Re: ...uh, add my 5yr old as an authorized user?

inthewoods — Tue, 09 Jun 2015 22:36:13 GMT

@bonehead88 wrote:
I'd also question the true gain of doing this. Unless your son will need a great credit history at 18-21 for independent purchases, the difference from adding him as an AU at 15 or 18 or something more appropriate will be negligible by the time he's 23-24. I started around 18 and was in excellent shape by 25.

Agreed. The real problem is getting a credit foothold—being able to get a non-AF non-secured card. Beyond that, the learning curve of initial small limits maturing into large lines over time is probably good for everyone. If your child experiences a period of financial issues and/or irresponsibility, the damage will be controlled as long as they only have access to the typical 20-year-old’s credit line. That way they will come to you for help before they accidentally burn through 25k of credit.

Re: ...uh, add my 5yr old as an authorized user?

vanillabean — Tue, 09 Jun 2015 22:48:06 GMT

@newhis wrote:

My DW and I, were able to build credit in USA from no score to have over 740 ficos in less than a year, starting with a secured card and a regular card. I believe we only need an auto loan or mortgage and a few years of credit history to be 800. So really, what is the point of having credit history before being 18 years old?

The other day I was driving behind a car, one of those family SUVs that can hold half a middle school baseball team, with a sticker, “My dog has a credit history that goes further back than that of your child!”

Re: ...uh, add my 5yr old as an authorized user?

Anonymous — Tue, 09 Jun 2015 22:51:28 GMT

I say do it. Why not. It will only help. It can't hurt. My mom added me on early (though not that early) and my 18th bday I got my Amex which is still my first solo card I still have. Scores are in 800s.