Never Too Young: Getting Your Child Financially Primed from an Early Age



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Category: Children Education, Parenting Tips

As a parent, it’s normal for you to worry about your child’s health and safety. However, with our financial futures being so heavily impacted by credit scores, many moms and dads are now starting to feel concerned about their child’s credit, too.

With that in mind, at what point can you start building a credit rating for your child?

Start Building a Credit Score for Your Child Today

The answer is as soon as you want to, just as long as you’re comfortable with making them an authorized user on your own credit card. In most cases, to get a loan or credit card, your child will need to be at least 18 years old, but it’s different when you use authorized usership.

Many credit card issuers (check here) won’t have a minimum age requirement for these types of users because they’re not the ones who are responsible for paying the bills.

Therefore, by allowing your child to use your card responsibly, they’ll start to build a good credit history for themselves. Of course, the strength of their credit rating won’t be as good as it would be if they were the sole user, but it’s a great place to start. And, it’s the perfect way to teach them how to use credit cards safely.

If having your toddler as an authorized user on your credit card seems a bit much, you may want to consider co-signing their first credit card instead. This is perfect if, at the age of 18, they’re heading off to college, and you can also co-sign their student loan or car loan.

By co-signing a credit card or loan, your child will be the primary user, so they’re credit rating will build up quickly. However, it’s important to be aware that there are some risks involved in this. If your child doesn’t pay their bills, you’ll be the one who’s responsible for it, so make sure you’re comfortable with this before you proceed.

Deciding if Your Child’s Ready to Start Building Their Credit Rating

As a parent, you’ll know when your child’s ready to do something. So, if you think they’re ready to have their own credit card, get them set up with one. This might be when they start driving, or it might be in case of emergency.

However, if you’re still not sure whether your child is ready for their own credit card, look out for the signs that they might be ready. This includes showing a genuine interest in building a credit score for themselves and showing an ability to spend and save their money wisely. If they know how to manage their money well, and understand how credit cards work, this is a good sign they’ll be able to manage one effectively.

Even though you can help your child build their credit score as soon as you want, it doesn’t mean you should. Instead, it’s important you’ve educated them about money first, before getting them on the right path once they show a good understanding of how money, and credit cards, work.

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