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Topics addressed on August 23, 2006:
Getting credit cards for your children can be a great teaching tool
If I order a credit card for myself and order additional cards for my children, will this help in establishing credit for them? Keep in mind that I will never let them know they have a card.
The account information is reported on both the primary account holder’s credit history and on the credit reports of any authorized users or joint account holders. As a result, including your children as authorized users or joint account holders will help them build positive credit histories – as long as you always pay the bills on time.
I would wait until your children are at least in their early teens, however, before adding them to any of your accounts. It is not necessary to establish a credit history at a very young age.
I don’t understand why you would not tell them they are included on or have their own credit card accounts. If you keep it a secret, you could miss a very valuable teaching opportunity.
Building positive credit histories for your children but failing to teach them how to use the positive history to their advantage could only be setting them up for trouble.
By including your teenagers as authorized users or joint account holders, you still will receive the bills and maintain control of the accounts. You can supervise their use of the cards, perhaps by letting them make a purchase at the mall or online, while you are supervising them.
At the end of the month you can sit down with them to review the billing statement and write the payment checks.
You can also help them request copies of their credit reports so they can see the impact of the accounts and payments on their credit histories.
When they set out on their own they will be far ahead of their peers because they will understand how to use credit responsibly.
If you keep the credit cards secret, all your children will know when they leave home is that they have great credit histories that let them get credit whenever they want it, to buy whatever they desire.
That is a recipe for disaster.
Thanks for asking.
- The "Ask Experian" team