Helping College Son Build Credit Score

[HomeBuyerSpring2021]

I want to help my college senior son start building his credit score. He currently has no credit cards and no job. I can trust him not to abuse any card I put him on.

1. When adding child as Authorized User, do they get credit age from date you added them, do they adopt your total credit age, or do they adopt the credit age of the particular credit card you added them as AU to?

2. Assuming he currently has no credit score because he has no credit history, how will adding him as an AU impact what score he gets? If I have 780 Experian, will he have 780 Experian?

3. I feel like I saw recently where it takes 6 months of credit to get a credit score. Is that also true of adding him as AU? Will he have to wait 6 months to have a score?

4. He has started getting credit card offers in the mail for a Capital One student card. I'm assuming that student cards don't require them to have a job. Again, he is very financially responsible & conservative (manages his own budget), so he won't get himself into trouble. So are there any downsides to encouraging him to apply for a student credit card to begin buiding his own credit history (especially credit age)?

5. In the future, assuming he has a credit history of his own, what would be the impact of removing him from my card as AU (just a loss of credit age)?

6. Does it matter which credit card I add him as AU to? I would choose a bank card, but would like to choose one of my lower CL ones just to minimize the risk in case he lost it or it got stolen. Will the CL on the card I add him to matter to his score as long as it's reporting more than $0 each month?

7. In order to benefit, does he actually have to *use* the card I added him to or is it enough to have him listed as AU & I don't actually even have to give him the actual card to use?

Thanks in advance. I know that's a lot of questions. I've never helped someone build a credit history & I started mine rather late (post-divorce), so I'm happy to be able to educate my children & start them off on the right foot.

[SouthJamaica]

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@HomeBuyerSpring2021 wrote:

I want to help my college senior son start building his credit score. He currently has no credit cards and no job. I can trust him not to abuse any card I put him on.

1. When adding child as Authorized User, do they get credit age from date you added them, do they adopt your total credit age, or do they adopt the credit age of the particular credit card you added them as AU to?

With Amex no. With most others yes.

2. Assuming he currently has no credit score because he has no credit history, how will adding him as an AU impact what score he gets? If I have 780 Experian, will he have 780 Experian?

Oh yes, it will help. No his score won't be the same. There are many other things in your file that aren't in his.

3. I feel like I saw recently where it takes 6 months of credit to get a credit score. Is that also true of adding him as AU? Will he have to wait 6 months to have a score?

I think so, but I don't know.

4. He has started getting credit card offers in the mail for a Capital One student card. I'm assuming that student cards don't require them to have a job. Again, he is very financially responsible & conservative (manages his own budget), so he won't get himself into trouble. So are there any downsides to encouraging him to apply for a student credit card to begin buiding his own credit history (especially credit age)?

There are better cards out there. If I had a son who was taking my advice on credit cards I would advise him to join a credit union.

5. In the future, assuming he has a credit history of his own, what would be the impact of removing him from my card as AU (just a loss of credit age)?

Yes, when that time comes, he would just be losing the age (and the other data that comes with the account).

6. Does it matter which credit card I add him as AU to? I would choose a bank card, but would like to choose one of my lower CL ones just to minimize the risk in case he lost it or it got stolen. Will the CL on the card I add him to matter to his score as long as it's reporting more than $0 each month?

No it won't.

7. In order to benefit, does he actually have to *use* the card I added him to or is it enough to have him listed as AU & I don't actually even have to give him the actual card to use?

No he doesn't have to use it. He doesn't even have to have it.

Thanks in advance. I know that's a lot of questions. I've never helped someone build a credit history & I started mine rather late (post-divorce), so I'm happy to be able to educate my children & start them off on the right foot.

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[Anonymous]

Agree, avoid Cap1, Disco is better, check prequalify. 

[disdreamin]

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@SouthJamaica wrote:

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@HomeBuyerSpring2021 wrote:

4. He has started getting credit card offers in the mail for a Capital One student card. I'm assuming that student cards don't require them to have a job. Again, he is very financially responsible & conservative (manages his own budget), so he won't get himself into trouble. So are there any downsides to encouraging him to apply for a student credit card to begin buiding his own credit history (especially credit age)?

There are better cards out there. If I had a son who was taking my advice on credit cards I would advise him to join a credit union.

<snip>6. Does it matter which credit card I add him as AU to? I would choose a bank card, but would like to choose one of my lower CL ones just to minimize the risk in case he lost it or it got stolen. Will the CL on the card I add him to matter to his score as long as it's reporting more than $0 each month?

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In my limited experience, not all credit unions are open to extending credit to young members without regular income. My college junior required a co-signer for a card from a CU they've been a member of for years, and have a bit of savings deposited with (low 5-figures). The CU did not offer any sort of secured cards, so I co-signed on a low-limit card. I am not concerned about ability to pay, and in a few years we will close that account if the CU can't graduate it solely into my eldests name.

To address the second part I snipped out of the original post, I chose AmEx for the kids because I can set spending limits via an app or online, and my children can also lock their card if they suspect it has been misplaced or stolen. They each have a NPSL charge card and a credit card, for different purposes. I didn't like my oldest carrying only AmEx products, for obvious reasons, which is why I encouraged them to consider a product in the MC or Visa network when they app'd for their own card.

For what it's worth, my eldest also has a debit card which is not linked to their primary savings account. However, I have recommended they put everything on credit cards and PIF monthly rather than use their debit account. They have a main savings account that is linked to the debit/savings account so money can be transferred when they want to purchase something. My hope is that this minimizes the danger of someone skimming their debit card and cleaning out their savings.

[HomeBuyerSpring2021]

Thanks everyone. Great advice. I'll get him started on a card. I've been happy with AMEX and Discover in terms of my own accounts & how they have been to work with. But as you mentioned, I'd like him to have a MC/VISA & don't want to put him on 2 cards right now. I'll shop around for prequalification options too. Any reason you are looking down on Capital One? Is Citi any better? My own experience with a fraudulent purchase with Chase makes them a "no" even though I have 2 of their cards.

[Anonymous]

Cap 1, dings ALL 3 bureaus when you app, won't grow, no chat or secured message option. I think Disco/Amex/BOA grows faster.

[Jnbmom]

I think the best you can do it's not worry about his score . That will come in time . Teach him about credit and how to use it responsibly. It's good to add him to one your cards . I did this for my daughter then she applied on her own for the discover card and got it , but she worked 3 jobs while she was in college and knew only charge what she could pay . She got a second card on her own with navy and I removed her from my Amex card. She is now 23 finishing grad school has just 2 cards, student loans and her scores are high 700s .

[disdreamin]

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@Jnbmom wrote:

I think the best you can do it's not worry about his score . That will come in time . Teach him about credit and how to use it responsibly. It's good to add him to one your cards . I did this for my daughter then she applied on her own for the discover card and got it , but she worked 3 jobs while she was in college and knew only charge what she could pay . She got a second card on her own with navy and I removed her from my Amex card. She is now 23 finishing grad school has just 2 cards, student loans and her scores are high 700s .

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My reasoning for assisting my rising junior with obtaining a card, as well as getting them on a couple of mine, was the reality that any travel for interviews (which should be coming up next academic year) will likely require a credit card with a reasonable limit. The only way to obtain such cards is building credit over time.

My reason for getting the FICO score process moving was that apartment rental will require decent credit sooner rather than later. That might be helped by piggy-backing on my cards, but eventually the kids will need their own cards for their own expenses.

My sincere hope is that anyone who assists their kids with obtaining cards also focuses on teaching them how to manage credit and use it wisely as well. Some lessons have to be learned the hard way, unfortunately, but I hope I've modeled good behaviour for my kids. So far, so good, but they're still young.

[Rekyrts]

I concur with your reasoning. It makes sense.

[Anonymalous]

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@HomeBuyerSpring2021 wrote:

2. Assuming he currently has no credit score because he has no credit history, how will adding him as an AU impact what score he gets? If I have 780 Experian, will he have 780 Experian?

3. I feel like I saw recently where it takes 6 months of credit to get a credit score. Is that also true of adding him as AU? Will he have to wait 6 months to have a score?

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Since I didn't see a complete answer to these two:

2. That's not how it works. All that happens when you add your son as an authorized user is a new tradeline will appear on his credit report. While this can impact his score, it's because that tradeline is factored in when they run his report through the algorithm that spits out a score. No points or anything like that will be inherited from you, the primary user. Your score and his score are calculated independently.

If you add your son as an AU, all that appears on his credit report is that tradeline. This is good, in some ways. It means if you have other bad things on your report, like a collection, it won't affect your son at all, because none of that gets added to his report or factors into his score, in any way. On the other hand, it can be bad, because when he inherits that tradeline, he inherits all the bad that comes along with it. If there are negatives on that tradeline, like 90 day lates, that can be very bad. Also, he'll inherit utilization. If the card is regularly reporting 70% utilization, he'll be hurt a lot more than he's helped. If you're going to make your son an AU, one of the biggest priorities should be picking a card with low or no regular utilization. 

Also, AUs don't always count. Because people started selling tradelines, the credit bureaus put various fraud detection schemes in place, and if they decide your son's not a legitimate authorized user, the tradeline will be ignored when calculating your son's score. Though you're probably okay. Since AUs are designed for spouses, having the same address and last name helps, and perhaps having opposite genders.

Finally, AUs aren't a panacea. Thanks to an old AU card (and you want the AU card to be old, because that's the biggest factor that can help your son's score), when I became scorable I had FICO 8s in the 760s through 780s.... and I still got denied. Lenders don't just look at a score. They look at the whole credit profile, and when they looked at mine, they saw I only had 6 months of personal credit history. That matters a lot more than a score. Becoming an AU can help, just don't expect a new file with an AU to be treated anywhere near the same as a thick, aged file, even if they have the same score. Your son is still new to credit, and should be targeting lenders who are friendly to those new to credit. Student cards, Capital One, Discover, Navy Fed, etc.

3. Yes, an AU can shortcut the 6 month requirement. Last year I was added at as AU when I had only 5 months of credit history, and FICO was able to generate scores for me immediately.