topic Re: Credit score for a minor? in Credit Cards

Credit score for a minor?

tcbofade — Wed, 29 Feb 2012 18:51:24 GMT

My oldest is about to be 17.

He doesn't want to start his credit life at zero on his 18th birthday.

He has asked me to add him as an authorized user on one of my accounts.

I'm OK with that...Nationwide bank is OK with that.

They'll add him as an Authorized user sometime this month, and the credit line information should show up on my sons credit reports as an AU account.

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 18:55:57 GMT

Right.

Once he gets into college, he'll also find plenty of cards available to him as a student as well.

Hammer that point into him, please. My parents never did so. I only signed up for a CC because I wanted a free shirt. One of my best decisions ever made, even though I have no clue where that shirt is now.

Re: Credit score for a minor?

pizzadude — Wed, 29 Feb 2012 19:00:01 GMT

@tcbofade wrote:
My oldest is about to be 17.

He doesn't want to start his credit life at zero on his 18th birthday.

He has asked me to add him as an authorized user on one of my accounts.

I'm OK with that...Nationwide bank is OK with that.

They'll add him as an Authorized user sometime this month, and the credit line information should show up on my sons credit reports as an AU account.

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?

From a FICO scoring perspective any AU accounts are scored identically to his other accounts; they are considered to be his.

Re: Credit score for a minor?

tcbofade — Wed, 29 Feb 2012 19:05:22 GMT

@pizzadude wrote:
@tcbofade wrote:

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?

From a FICO scoring perspective any AU accounts are scored identically to his other accounts; they are considered to be his.

I didn't know that.

I thought that an AU account had a lesser affect on FICO scoring.

Thank you!

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 19:12:29 GMT

On score, not a lesser effect.

Lenders might "view" it as not as important, but that's completely independent from actual FICO score.

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 19:13:57 GMT

Recently FICO announced that they were going to count AUs differently, but they renigged on that over worries that spouse's would suffer lower credit ratings and could be in violation of some laws. Ultimately, as long as it is family, and they don't think you are selling your credit AU spots, it is exactly the same from a FICO standpoint.

However, under a manual review, it is considered a little different. It is great to get him started though. As others said, have him get a CC when he is a student as well. Teach him how to properly use it per the advice here and he should have some quality credit by the time he graduates college!

Re: Credit score for a minor?

pizzadude — Wed, 29 Feb 2012 19:18:34 GMT

Other creditors may not count it as being a "real" account ~ but FICO scoring does.

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 19:26:43 GMT

I have a question regarding minors with a FICO® score and college students as well. I am not in that age bracket by a long shot but, I have been told over and over again that I needed to start out with secured credit cards to generate a FICO® score and that it would take 6 months to accomplish this. YET, "students" are able to get credit cards seemingly right away WITHOUT any FICO® -- why are the rules bent for the younger age bracket?

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 19:37:24 GMT

Just a guess here, but probably because CC companies want to get your business young and hope to keep you around for life. Student cards usually come with pretty low limits, so not a lot of risk, but a lot of reward. Most students will gradaute and make decent money, and be your customer for years.

Re: Credit score for a minor?

Anonymous — Wed, 29 Feb 2012 19:39:39 GMT

@Anonymous wrote:
I have a question regarding minors with a FICO® score and college students as well. I am not in that age bracket by a long shot but, I have been told over and over again that I needed to start out with secured credit cards to generate a FICO® score and that it would take 6 months to accomplish this. YET, "students" are able to get credit cards seemingly right away WITHOUT any FICO® -- why are the rules bent for the younger age bracket?

They know you are going to use them and hopefully carry a balance.

That and they usually just give you a small limit anyway. I know of one company that looked specifically for students that were receiving federal money/grants, since it was pretty much a slam dunk that they'd either get paid back or get money off the interest off of the balance.

Re: Credit score for a minor?

atarvuzdar — Wed, 29 Feb 2012 19:55:22 GMT

@tcbofade wrote:
My oldest is about to be 17.

He doesn't want to start his credit life at zero on his 18th birthday.

He has asked me to add him as an authorized user on one of my accounts.

I'm OK with that...Nationwide bank is OK with that.

They'll add him as an Authorized user sometime this month, and the credit line information should show up on my sons credit reports as an AU account.

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?

Just make sure you're making him an AU on an account with perfect credit history and low utilization, otherwise you'll start him out behind the ball.

Good luck!

Re: Credit score for a minor?

tcbofade — Wed, 29 Feb 2012 20:02:41 GMT

@atarvuzdar wrote:
@tcbofade wrote:
My oldest is about to be 17.

He doesn't want to start his credit life at zero on his 18th birthday.

He has asked me to add him as an authorized user on one of my accounts.

I'm OK with that...Nationwide bank is OK with that.

They'll add him as an Authorized user sometime this month, and the credit line information should show up on my sons credit reports as an AU account.

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?
Just make sure you're making him an AU on an account with perfect credit history and low utilization, otherwise you'll start him out behind the ball.

Good luck!

Yeah well, I'm half way there...and he is aware.

I don't remember how long the account has been open...three years maybe? Perfect payment history...utilization is awfully high tho.

As utilization is one of those "snap shot" issues, I should have at least a year before it actually matters...

Thanks everyone for all of the input!

Re: Credit score for a minor?

webhopper — Wed, 29 Feb 2012 20:03:54 GMT

@Anonymous wrote:
I have a question regarding minors with a FICO® score and college students as well. I am not in that age bracket by a long shot but, I have been told over and over again that I needed to start out with secured credit cards to generate a FICO® score and that it would take 6 months to accomplish this. YET, "students" are able to get credit cards seemingly right away WITHOUT any FICO® -- why are the rules bent for the younger age bracket?

Market research has determined that a customers brand loyalty for Credit Cards is determined by who their first issuer is... Therefore, everyone struggles to be the first issuer... also most college kids are supported by their parents or student loans... The credit card companies figure that this is easy money to get their hands on and if not, then maybe these kids are smart enough to actually finish school and earn more, becoming even better CC customers as adults since they'll be making more than their non-degreed counterparts. Also, if they don't pay, they will get 1099 by the credit card companies, and the credit card companies can write off the losses.

Re: Credit score for a minor?

Creditaddict — Wed, 29 Feb 2012 21:12:54 GMT

Short on time so sorry if someone stated:

I was added to my parents card at 16 because we were moving and I was traveling back and forth to our old state by plane and by car to see friends, etc. whatever...

When I turned 18 I went running on my credit card APP Spree!

Citi - $5k

Then I didn't really know anything about scores, credit limits, etc. etc. and how I started out Prime I quickly acquired anyone that would approve me... Don't get me wrong I did have many prime but I started to muddle the water by applying for student cards (Yes, I was a student, but my credit in the beginning allowed me to skip student) so if I had known credit better I could have bypassed those cards that later needed to be closed out and apply for regular.

The fact he is asking for you to help him in this way I assume is a good thing and that he kind of understands the credit system and his scores etc.

If I were him once I turned 18 if you add him to 1 or 2 cards (hopefully nice prime banks with nice large CL's and low balances and hopefully older!)

1. Amex Zync or Gold - Close it after a year if you don't want to pay annual fee but get in with Amex for backdating later in life when he has better income after school.

2. Citi - I like Citi Forward because of eating out deals, etc. - also known for very nice CLI and frequently

3. Maybe join a Credit Union... also like Amex, if he stays living in same area, that relationship could mean a lot later on down the road (car, Morgage, etc.)

4. MAYBE 1 Store Card depending what he spends most money on.

I would skip applying for student cards and I would not apply for more than 3-4 and then just sit back for at least 1 year. Then review what is next step..

Re: Credit score for a minor?

LS2982 — Wed, 29 Feb 2012 21:36:06 GMT

@tcbofade wrote:
My oldest is about to be 17.

He doesn't want to start his credit life at zero on his 18th birthday.

He has asked me to add him as an authorized user on one of my accounts.

I'm OK with that...Nationwide bank is OK with that.

They'll add him as an Authorized user sometime this month, and the credit line information should show up on my sons credit reports as an AU account.

I realize that an AU account is not as good as his own account, but having an AU tradeline is better than nothing and should help him develop a score...

Right?

This is true. Are you a credit union member? Maybe have him start there or Cap1 for his first actual card.

Re: Credit score for a minor?

Jazzzy — Wed, 29 Feb 2012 21:49:01 GMT

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.

Re: Credit score for a minor?

LS2982 — Wed, 29 Feb 2012 21:50:40 GMT

@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.

May be benificial for her to opt-out as well!

Re: Credit score for a minor?

frogfan12 — Fri, 02 Mar 2012 13:24:35 GMT

I think it's a great idea to add your kids to your cards if you have good credit history. One of my friends was an AU on her parents' cards and she has a score in the 800s and she's not even 25. I had to build credit history on my own and it was kind of difficult at times. When I have kids, I will add them as AUs on my cards but they will have a spending limit. It teaches kids how to use credit responsibly and you're being transparent as a parent in terms of how you handle your finances. I think it's a win-win situation.

Re: Credit score for a minor?

Anonymous — Fri, 02 Mar 2012 13:27:40 GMT

Depends on how responsible you think your kid is. If I trust my kid, I will give them a card with a spending limit. If I don't trust them very well, I will still make them an AU, but they will not be getting a card.

Re: Credit score for a minor?

tcbofade — Fri, 02 Mar 2012 14:13:41 GMT

@Anonymous wrote:
Depends on how responsible you think your kid is. If I trust my kid, I will give them a card with a spending limit. If I don't trust them very well, I will still make them an AU, but they will not be getting a card.

Ding!

I never said that I was going to GIVE the kid the card...lol...

He just wants to have a credit score at 18....the physical card itself will be in my desk drawer until further notice.