Should I add my 17yo as an authorized user to help build her credit?

[Anonymous]

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@MyLoFICO wrote:

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@Anonymous wrote:

That is great that you want to help your daughter to do well credit wise. First thing to keep in mind, an AU affects your credit as well so make sure that if you give her the card(s), that you trust her to not spend what she or you can't afford as you are on the hook. A way to remedy that is to keep the card yourself and have her as an AU for the score.

Secondly, you need to check with the bank who gave you the card you plan to AU her on. Some banks do NOT report AUs to the credit bureaus, others do. Wouldn't want you to waste your time and AU your daughter for her to be rejected later for "no credit history". My mom had a similar issue and couldn't add me as an AU when I turned 18 a few years ago. I ended up getting a very generous bank to give me a student card with a $500 limit by invitation only (not a publicly offered CC). Since then I started apping for cards to maximize rewards and in the few years have a great score and great cards. So if your banks don't offer to report AUs to the credit bureaus, consider a secured card (or student).

Just in case, the best secured card is the Discover Secured card, as it has rewards and Discover doesn't mind thin files anymore. Or the Capital One Secured, as they tend to accept people new to credit easily. I'm not as sure about student cards, but Discover or CapOne is usually recommended for that as well. 

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Can they get a secured card if they are under 18? Also, I wouldn't let them app any crapital one cards as their first. It might be a good card but 3 inq's right our of the gate would be a disservice. I would recommend Discover though. 

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Not usually. Some banks still allow a cosigner, but they are becoming less and less an option. I was talking about at 18, since that would be later this year for the OP. Though I found out you can add an AU they are 18 today (not sure what the min age is for the AU). I would recommend the Discover first. But CapOne is a great option if denied for Discover. And 3 pulls, across the bureaus, doesn't hurt for a first card, since one shouldn't be apping for credit much in the first couple years (it takes 6 months to get a FICO).

CapOne is not as bad as many make it out to be. When a secured card becomes unsecured, you can PC it to the QS and CapOne is a great lender for those that want one card for all things with no hassle (since it has no FTF and no min redemption). They aren't a great bank for maximizers, which is why I have never had a CapOne card. Though the Premier Dining is on my list because of the no FTF and great rewards structure while abroad.

[Anonymous]

So many good comments by people thus far.  Some of the great points made:

(1) Tend to choose one of your older cards.  "Age of oldest account" is the primary benefit that an AU card gives a young person.  If you make her an AU on a card that is only a few months old, you are not helping her.  Far better would be to make her an AU on a card that is four years old, or better yet 10 or 15 years old.

(2)  The AU should be a pure stepping stone device so that she can begin building credit in her own name.

(3)  When she does apply for her first card, make sure that your AU card is reporting a small positive balance (e.g. $10).  If all her cards are reporting $0, then she will get a scoring penalty.

(4)  Only do this if you are willing to do it right, which involves pulling her reports once a month, teaching her how to do that, confirming that the new AU card has appeared on all three reports, etc.

(5)  Make sure you have thought carefully about your daughter's own personality.  There's no doubt that you can help her get very high scores and a few nice cards by the time she is 19.  But if you feel that she might have trouble with spending, you are only putting her at that much greater risk -- the "help" you gave her made things worse, since it gave her that much greater capacity to incur debt.

(6) Also do some research on what cards might be good to get for her first card.  I did a couple minutes googling and found this, which appears to be a card she could could get before she is 18.  Again, do the legwork yourself to find out what is best:

https://www.dfcufinancial.com/personal/cards/credit-cards/teen-and-student-visa

After she has a card in her own name and she is more than 18, you might want to consider whether the Share Secure Loan technique is right for her.  It would get her a mix of credit and a really good "installment utilization."  You can find out about it here:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

[Anonymous]

When I turned 18 my mother hauled me to the bank to get a checking account and a visa card.    She knew the manager and it was a done deal.  At the same time she "made" me apply for a Sears card  showing her biz as my job. I got the Sears card first by a few days then the Visa with the  higher limit. on Sears lol.  When I graduated i had  Sears, Visa, Mastercard and 2 gas cards. 

[Anonymous]

Our son is 15 and I added him on my Slate card.  It currently has a $500CL as I moved the rest to my Freedom card.  He's been great with not spending on oyr paypall account  through the PS4 without approval.  Even if he has the funds, he calls and asks if its ok. We know we can trust him.   Its mostly in case of an emergency, but we figured it was good to get him started as next year there will be gas, car insurance etc once he has his liscence. Any credit stuff is a bonus at this time.

[Anonymous]

@adronet2

Has your child successfully managed a Visa/MC Debit card tied to a Deposit (Checking/Savings) account?

If there is some doubt that she can handle a Credit Card - successful management of a Debit Card could help assuage you in taking the next step in making her a AU on your account or even getting her own Secured Credit Card.

You get to find out if she is capable handling 'plastic' when making purchases (i.e. basic account management skills) while putting no one's Credit Report at risk.   Just a thought.

[Anonymous]

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@Anonymous wrote:

@Anonymous

Has your child successfully managed a Visa/MC Debit card tied to a Deposit (Checking/Savings) account?

If there is some doubt that she can handle a Credit Card - successful management of a Debit Card could help assuage you in taking the next step in making her a AU on your account or even getting her own Secured Credit Card.

You get to find out if she is capable handling 'plastic' when making purchases (i.e. basic account management skills) while putting no one's Credit Report at risk.   Just a thought.

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I think that is a great idea.  I was toying with that too.  My problem was that I couldn't really see how "success" would play out (as in "successfully managed").  The reason being that a debit card prevents you from screwing up.  If you try to spend more than you have in the account, it just declines whatever transaction would put it over (without penalty).  A parent looking at the statement would not even be able to see how many times a declined purchase happened -- am I right?

I certainly agree that having managed a checking account with an attached VISA debit card would be for me a pre-req for going on to other things.  But it would be nice if the training wheels on the bike didn't completely preclude falling down.

Somehow what we want is a safe sandbox where a kid could screw up (fail to budget, fail to make payments, etc.) and yet that wouldn't have any effect on his credit report.  I have some ideas along that line, but they might be a little involved.

[grillandwinemaster]

Excellent topic OP! Kudos to you for starting it!

[grillandwinemaster]

I added my 16 year old teen daughter to my lowest limit card this morning.  

I want her to start thinking in terms of her finances and being credit responsible.  

This also means she has to balance her checking and pay off what she charges. Personally, I'm not of the mind set of simply adding them as AU so they can piggy back off my credit. If it comes too easy, they won't appreciate it. 

Personally, I will give her the card to use and carry with her. She's very responsible and has a good head on her shoulder. 

My younger daughter seems more impulsive and "spend" driven. So I'm not sure how I will handle her situation when the time comes to add her as an AU. 

Each of my teen girls has a unique personality, so I will have to adjust "uniquely" to each of them. 

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

@Anonymous

Has your child successfully managed a Visa/MC Debit card tied to a Deposit (Checking/Savings) account?

If there is some doubt that she can handle a Credit Card - successful management of a Debit Card could help assuage you in taking the next step in making her a AU on your account or even getting her own Secured Credit Card.

You get to find out if she is capable handling 'plastic' when making purchases (i.e. basic account management skills) while putting no one's Credit Report at risk.   Just a thought.

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I think that is a great idea.  I was toying with that too.  My problem was that I couldn't really see how "success" would play out (as in "successfully managed").  The reason being that a debit card prevents you from screwing up.  If you try to spend more than you have in the account, it just declines whatever transaction would put it over (without penalty).  A parent looking at the statement would not even be able to see how many times a declined purchase happened -- am I right?

I certainly agree that having managed a checking account with an attached VISA debit card would be for me a pre-req for going on to other things.  But it would be nice if the training wheels on the bike didn't completely preclude falling down.

Somehow what we want is a safe sandbox where a kid could screw up (fail to budget, fail to make payments, etc.) and yet that wouldn't have any effect on his credit report.  I have some ideas along that line, but they might be a little involved.

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All my CCs have notification features (which I use).   I don't use Debit Cards very often anymore - but I would imagine that you could get the same text and/or email messages for most if not all activity with the card just like the CCs. 

[Anonymous]

Wow so many responses and sooooooo many helpful ones!!!  My daughter has had a checking account with a visa debit card since she turned 16, so right at a year and a half.  The day she got her drivers license we marched straight to the bank and set that up!  She has done suprisingly well!  She barely uses the card except for gas!  (proud mom moment right there)  I also spoke to my credit union and they can do a small loan for her against a savings account.  Now I'm thinking that may be a GREAT option since basically the loan can just pay itself and we only have to come out of pocket except for the little bit of interest.  The oldest card I have is a little over a year old so maybe I should wait until we can get her a secured card when she turns 18 in the fall.  It's not really a rush just definitely something we want to teach her before she heads off to college in a year!