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Helping kids get their credit started.

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Established Member

Re: Helping kids get their credit started.

They're off to a great start! Could have benefited from having a parent like you, or for being interested in being financially responsible early on.

Message 11 of 20
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Regular Contributor

Re: Helping kids get their credit started.

So coming from a 20 year old, I remember getting my disco IT right as I turned 18 bc I really wanted to build credit, however I was in need of an auto loan 6 months after getting my first CC and my credit was next to non-existent. After days of research I was facing a 9.45% interest rate and all attempts of getting family to co-sign had failed I accepted.. I didn't hold on to it long, but my point is that I can defintely understand someone being hesitant of co-signing an 18 year old kid's loan.. that is a giant risk. I personally couldn't justify co-signing anyones loan due to the amount of risk I would be taking on.. call me selfish, but can you give your thought process when you decided to co-sign your kids? I'm assuming you're confident in your kid's being understanding of responsibility.. if you weren't would you still co-sign?

Message 12 of 20
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Valued Contributor

Re: Helping kids get their credit started.

When I did this for my DS, and a close family friend I used CapitalOne's option not to send a card, but still make the user an AU. Both were able to apply for there own account in about 3 months, after I made them an AU.  Safer for you, still as effective, perhaps more so for them. 




Cards: Chase Southwest 20k & CSR 17k & CSP 10k & FNBO 30k Oregon Duck 5k, & AMEX BCP 32.5k & Amex Magnet 15k&amg; Hilton Surpass 7.5k & Delta Gold 12k & Zync NPSL, Fidelity AMEX 17k Commerce5.9k & Cash Forward 7.5k & Sams Club MC 20k, Paypal Extras MC 10k, Paypal Credit 7.25k CapOne Venture 15k, QS 2.5k, QS 750, Amazon 10k, Walmart 10k, Citi Simplicity 18k, Discover IT 23k and a nice stack of store cards.
Landmarkcu Personal Loan 10k
Message 13 of 20
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Established Member

Re: Helping kids get their credit started.

I have all three of my kids as AU on multiple accounts (24, 21 & 18). They were able to get Discover, AMEX and BOA on their own afterward.

AMEX Everyday is a fast grower in the numbers game. The 18 YO was able to get 3x CLI to $25.5k after 61 days. I highly recommend the card.
Message 14 of 20
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Established Contributor

Re: Helping kids get their credit started.

I have done the same.  The card arrives and I hold onto it.  The AU is simply to help their overall CL.  Not let them use the card

 

July 31/2019. EX-712. EQ-704. TU-726
Dec 16/2019. EX. 721. EQ. 723. TU 746
May 17/2020 EX. 733 EQ. 729 TU 753

July 5/2020 EX. 726 EQ. 720 TU 745
Inq. EX 8 EQ 4 TU 3


Cards
Amex BCP $20k
Apple GS $15k
BMW/Elan $2.5k
Cap1 QS $16.7k
Chase Amazon $13.6k
Chase United Club Infinite $20k
Citi DC $13.5k
CreditUnion1 $9k
DiscoverIT $20.5k
HSBC Gold - $10.5k
Wells Sig Visa $12k
Message 15 of 20
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Established Member

Re: Helping kids get their credit started.

i don't want to hijack your thread - but what you're doing for your children is exactly what i want to start doing for my 21 yo son.   i'm unclear exactly how adding your children as AU works.

Do they get their own cards with separate numbers?   if so - how/if are their cards linked to my account?  can i see their spending/payments...

any pointers to other threads or basics on this topic are much appreciated.

Message 16 of 20
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Established Contributor

Re: Helping kids get their credit started.

Add them as an AU to one or more of your existing cards

when the card arrives, you decide if you want them to have/use it, or you put it in your safe/ drawer

 

they get the benefit of the CL, which will help their Util if they already have a card of their own

 

if they don’t get, wait 3 months then have them check scores and apply for their own.  

 

It is all on your account. So if you let them use the cards, you will see every purchase they make

however, the benefits come from making them an AU.  They never need to use the cards.   That is up to you. 

July 31/2019. EX-712. EQ-704. TU-726
Dec 16/2019. EX. 721. EQ. 723. TU 746
May 17/2020 EX. 733 EQ. 729 TU 753

July 5/2020 EX. 726 EQ. 720 TU 745
Inq. EX 8 EQ 4 TU 3


Cards
Amex BCP $20k
Apple GS $15k
BMW/Elan $2.5k
Cap1 QS $16.7k
Chase Amazon $13.6k
Chase United Club Infinite $20k
Citi DC $13.5k
CreditUnion1 $9k
DiscoverIT $20.5k
HSBC Gold - $10.5k
Wells Sig Visa $12k
Message 17 of 20
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New Contributor

Re: Helping kids get their credit started.

Assuming they both PIF each month then there isn't really any "right" answer.  Only thing is to fine tune utilization when it is time to apply for new credit.

Message 18 of 20
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Established Contributor

Re: Helping kids get their credit started.

Depending on the lender, you might be able to set a limit on an AU card. Amex gives me that option for the AUs on my Gold account. The AU cards will have the AU's name, and their own card number, and any charges are added to your balance. I was able to add my daughter as AU on a couple of cards when she was 16 (and started driving). One was a gas card, the other the Amex Gold for emergencies only. At the time I was doing it for practical purposes and didn't even realize how it might affect her credit scores. As it turns out, pretty well, because her oldest closed card is 7 years older than she is, and the oldest open is only about 3 years younger than she is so she has fantastic credit age for her age.

 

I've read that many lenders now require an AU to be at least 18.

 

Also note that some lenders will use the account age for the reported open date, others will use the date the AU card was issued. Amex used to the the former, but now does the latter. If you have specific cards you want to check on, somebody here probably knows.

Scores: Jun 20: EX FICO8 823, TU FICO8 813, EQ FICO8 820
AoOA: closed: 36 years, open: 25 years; AAoA: 11.8 years
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Slate, Chase Amazon, Chase CSP, Citi AA Plat, Sync Lowes, Sync JC Penney - total CL 145k
Loans: Prosper (20k/3yrs 7.14%), Lending Club (10k/3yrs 5.89%), Chase car loan (35k/6yrs 0.9%)
Message 19 of 20
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Valued Member

Re: Helping kids get their credit started.

I did something similar to my son and daughter when they hit 15. I set them each up a bank account with a debit card which I deposited things like their allowances, monetary gifts (birthdays etc) in. I also put them as an authorized user on one of my credit cards with $500 limit lock for emergencies.

 

However, the results were night and day....

 

My son was very frugal, saved pretty much every penny he received, only used the "emergency" account twice in four years and called to ask me if it was ok each time. By the time he graduated highschool he had over $4,000 in his bank account.

 

My daughter, on the other hand, was the polar opposite. Within two months of getting her accounts she had overdrawn her bank account and ran the emergency card up to the $500 limit, apparently her idea of an "emergency", according to my credit card statement, was a sale at Forever 21, multiple fast food stops and getting her hair done. Needless to say this experiment quickly ended and we went back to cash until she could demonstrate some responsibility.

 

It's remarkable how two kids that grew up in the exact same environment can be such polar opposites when it comes to financial responsibility....



Message 20 of 20
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