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

[Anonymous]

---

@Anonymous wrote:

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!

---

Will your CU allow her to take out a 60 month loan, pay off almost all of it at month 1, and then keep the loan open for the full 60 months?  Alliant CU will allow you to do all of that -- and doing all of that is important if you want her to gain the full scoring advantage of the loan.  And on top of that Alliant will not do a hard inquiry when she applies for the loan.

Below is an overview of hoiw people here use a loan to boost their credit score.  The folks here like Alliant for the reasons I mention above, though in principle another CU would be fine if it allowed you to do everything that Alliant does.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

[MrsCHX]

For people who aren't sure about the teen's ability to manage the card - you can make them AU but never give them a physical card. They still benefit from the credit scoring portion.

My teens have had checking accounts with debit cards since they started working - around age 15/16. We had a couple issues with gas - those $1 authorizations clearing and sending them negative. But that hasn't happened for a very long time. 

I made both of them AUs on my GM Buypower card. It's a low limit card - $500. Once it was a year old (and my daughter turned 18), I had her apply with Cap One. So now she has her own Platinum with a $300 limit in credit steps. She gets to charge her gas to it and I pay it monthly. She's wrapping up her first year of college and hasn't been working, but once she is working, I'll a) try to get her upgraded to QS so she can get rewards and b) make sure she knows she can charge to it but ONLY for what she's buying anyway, and that it has to be paid off every month, in full.

I may make her AU on my AMEX now so she can start a history with them...

With the AU card, her own card and her student loans, her file is looking good so far and she's hovering just above 700 on all 3 bureaus.