Credit building Plan for my son

[keekers]

Hi all.  My oldest kiddo is turning 18 later this year and I'm formulating a plan to help him maximize his early credit build to give him a good start.  I'd appreciate your thoughts and any recommendations.  Currently he is an AU on 5 of my credit cards (perfect payment history) and after his birthday my plan for him:

• NFCU SSL loan: Open with $x (I'm unclear whether or not the amount matters?) for a 60 month term (for payment history purposes).  Pay off 92% immediately and pay a small amount each month from there.
• Open NFCU nRewards secured credit card with $5K (maximum allowed)
• After the nRewards card graduates, apply for a Discover Student card (SSL and nRewards should help by showing a credit mix)

Anything I could do better? 

[GZG]

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@keekers wrote:

Hi all.  My oldest kiddo is turning 18 later this year and I'm formulating a plan to help him maximize his early credit build to give him a good start.  I'd appreciate your thoughts and any recommendations.  Currently he is an AU on 5 of my credit cards (perfect payment history) and after his birthday my plan for him:

• NFCU SSL loan: Open with $x (I'm unclear whether or not the amount matters?) for a 60 month term (for payment history purposes).  Pay off 92% immediately and pay a small amount each month from there.
• Open NFCU nRewards secured credit card with $5K (maximum allowed)
• After the nRewards card graduates, apply for a Discover Student card (SSL and nRewards should help by showing a credit mix)

Anything I could do better? 

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 Minimum for 60 months is $3001, so that should probably be the amount, 92% of it returned to you once you make that payment. 

I assume no student loans? SSL wouldn't technically be needed/help as much if there are student loans on their file

Wouldn't be surprised if Discover would be able to approve for the student card without waiting the 6 months, but it's fair to wait. Navy might even throw $500 at an unsecured card, without prior personal history.

BoA if there's a previous banking relationship or Apple Card might be worth considering/checking as well if those are products they would want. 

Getting them started with Chase/Amex after a year would probably be the next step

[keekers]

No student loans; basically a blank file besides the AU accounts.  Good call on the $3001…any advantage to going above that $ amount?

[Jnbmom]

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@keekers wrote:
No student loans. Good call on the $3001…any advantage to going above that $ amount?

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No need to go higher .

I agree with @GZG  My daughter was 18 she was an AU on my Amex card . Got an unsecured discover card and then 6 months later got an unsecured navy card . Tying up 5K in a secured is really not necessary. He can probably get disco at his starting point . BTW she no installment loans as her credit began and was in the  high 700s. 

Yes she now had students loans (grad schools expensive) and her scores remains about the same .

[ForwardLooking]

Congrats on being a parent seeing their kid hit the 18 year milestone!

I have some mixed opinions on this.  I believe that you have nothing but good intentions and are wanting to help your son, but you may want to let him set up his own gameplan and just be a resource to him for questions he may have.  If he signs up for the loans, accounts, and cards because you pushed him in that direction, and he later defults or has a bad experiance, then he may blame you for pushing him in that direction.  He is turning 18, meaning he is becoming a legal adult and will be financially responsible for anything his signature is on.  Also, for your own sanity, refuse any desire to help by being a cosigner and making yourself liable.  The best thing you can do for a child reaching adulthood is to be there as a person to help guide them when they bring questions to you, not continue to control their life -- including their finances.  I have 5 kids myself, some more financially responsible than the others, but I had to let them all be their own persons, make their own decisions, and sometimes, dig their own holes they had to crawl out of themselves.  Keeping him as an AU is relatively harmless as long as he does not have access to an actual card, but he needs to know that he can remove himself and does not have to be an AU if things go south on your end.  Many lenders, however, actually penelize people that have a high number of AU accounts if they do mannual reviews which may affect his ability to get a good rate for a car loan or mortgage.

[Anonymalous]

I think you're overthinking it. I was an empty file less than 2 years ago, when I applied for my first card. No revolving tradelines, no installment loans, nothing. And Capital One gave me an unsecured card (the Platinum). Discover is similarly friendly to new files, and is probably a better option. Or any of the student cards that have popped up, like those from Discover, Cap1, or Chase.

About 5 months later, I joined Navy Fed. Shortly after, a 20+ year old AU card started reporting, and I became scoreable, which meant my FICO 8s started in the 760s though 780s range. Within a few weeks, I applied for Navy's More Rewards, and they gave me a very respectable SL.

I was completely unscoreable when I got my first card. I've never bothered with an SSL. I had only about a month's history with Navy Fed and 6 months of personal credit history when I applied for one of their cards. You don't have to jump through all those hoops.

More than that, your son is turning 18 and new to credit. Unless he's planning on applying for a mortgage in a year or two, maximizing his credit isn't that important. He has tons of time to build his credit profile, and in the mid to long term, it won't matter if he was fast out of the gate.

What is important is learning good habits. A year of using a card and paying it off (in full, every time) is more likely to put him on a good path for the rest of his life than a $5,000 CL. I went a little faster, but I wasn't a young adult managing my finances for the first time. I'm a grown adult with extensive experience managing my own (and other's) finances. My habits related to paying bills and managing a budget are already well-established.

 I also concur with @ForwardLooking on agency.

[Hex]

Sorry wrong thread. 🤣

[keekers]

@Hex I think you meant to respond to this thread  https://ficoforums.myfico.com/t5/Personal-Finance/Does-anyone-direct-deposit-into-3-accounts/td-p/66...

[Hex]

Thanks @keekers 

You are correct. I think I fixed it.  
🤭

[QuarterB35]

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@keekers wrote:

Hi all.  My oldest kiddo is turning 18 later this year and I'm formulating a plan to help him maximize his early credit build to give him a good start.  I'd appreciate your thoughts and any recommendations.  Currently he is an AU on 5 of my credit cards (perfect payment history) and after his birthday my plan for him:

• NFCU SSL loan: Open with $x (I'm unclear whether or not the amount matters?) for a 60 month term (for payment history purposes).  Pay off 92% immediately and pay a small amount each month from there.
• Open NFCU nRewards secured credit card with $5K (maximum allowed)
• After the nRewards card graduates, apply for a Discover Student card (SSL and nRewards should help by showing a credit mix)

Anything I could do better? 

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Go a little slower adding AU's, Opening accounts,etc.