3 ways to help your kids build credit

There are few things that can determine the future of someone’s life than credit. Credit is a measure of financial dependability and stability, and without credit, many people may find living in modern age quite difficult. It would be great if everyone was so financially well-off that they did not need credit to begin with, but that is not the reality we live in today. Credit is almost a necessity in life. Without credit, we would have a difficult time buying a car or a house, or any other major financial investment. 

It would also be difficult to even rent a car or an apartment or get loan of any kind. All of the things mentioned in the last sentence are things that most people need sometime in their life. The problem is that some people were raised unaware of the consequences a bad credit can have on a person. The last thing parents would want to leave their kids with, is a poor credit rating. It is important, therefore, to instil credit and financial responsibility in children at a younger age, so that they are not rattled when it comes to strike out on their own.


1. Co-sign a credit card for your kid

This sounds risky, as kids tend to be irresponsible- especially with money- but it is the most effective way to introduce your kids to credit. Make sure to set-up boundaries and make it clear when to use credit card. The best thing to do is to make it only for emergencies. The good thing is you can easily monitor your kid’s spending habits, and it will keep you on top of it since your credit rating will also be affected by their decisions.

2. Get them a debit card

This is a safe bet because debit cards do not have anything to do with credit- you cannot spend money with a debit card unless you have the money in your bank account. Even though this will not affect their credit rating, it will provide your kids with a credit profile, and when they do apply for credit they will have something to show to the credit provider, such as their ability to remain financially stable and dependable. Make sure they do not overdraft on their account very often.

3. Make them an authorized user on your credit card

This will give them some hands on experience with credit. But, you will be left footing the bill, if your kids do act irresponsibly. However, it will give them some experience with credit and at least help them learn to be responsible with it. You can also monitor their spending habits this way, and try to teach them on how to manage their spending habits on their own.


About the Author:

Jason aims to teach people good credit habits, including how to get a credit card with bad credit amongst other things.