Helping Your Children Establish Credit

It is important that your kids establish and learn to manage their credit early. Credit scores affect the ability to get a loan, the cost of insurance, and can even be important in obtaining employment.

So, how do you help your child establish credit? One of the first things is to make them an authorized user on one or two of your credit cards. As an authorized user, that credit will begin to report in their name also. It is not necessary to give them a card, but giving them a card with a low limit can help them learn financial responsibility be giving them responsibility for coming up with the money to pay the bill.

Always make sure that the bill is paid on time, and don’t allow the card to be paid late to “teach” them a lesson. Allowing them to miss payments, will lower their credit and start them out on the wrong foot.

Be careful when co-signing for your children. In most cases, you will not receive the monthly statements and your attempt to help teach them financial responsibility, could actually hurt your credit. When you find out that they are in trouble, it may be too late. If your credit is affected also; it could take months or years to repair.

For more information on credit issues go to:

www.experian.com
www.transunion.com
www.equifax.com

This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.