Young Adult Credit
Monday, May 11th, 2009
Credit Care for Teens and Young Adults
It’s great when parents are willing to help out with their kids’ futures, but be sure that you understand all of the implications before you help your kids build credit.
A credit card is a great way to start building credit as a teen or young adult, and many young people receive their first credit card from their parents. Before you hand your teen a credit card as they head off to the mall, think of whether it’s helping (or possibly hurting) their future credit.
Authorized Users vs. Co-Applicants
Oftentimes, a teen’s first introduction to credit is becoming an authorized user on a parent’s credit card. This is an easy way to get a credit card, but it’s not usually the best way. In almost every case, an authorized user doesn’t build positive credit of her own, but if the primary cardholder gets into default, it can be reflected on the authorized user’s credit report. Put differently, your child doesn’t stand to benefit from your good credit but could suffer if you fall under rough sledding*. (more…)
