@greenwitch The actual credit rating doesnt transfer, but your history of paying, length of credit does, which in turns boosts their credit scores. I only added my son to a store cc in high school,which I only had for a year or so. When he got his first cc(discover) as a sophomore, he was only given a $500 limit. I added my daughter to my visa in high school, when she got her first cc(discover) she was given a $1500 limit.
Having a kid on as an additional authorized user seems to translate. My oldest gets solicitations to refinance large mortgage amounts, and apparently has had a credit card since he was eight, at least that’s what his credit report says. Both kids have scores over 760, last time I checked, with no credit cards of their own.
I’m surprised by those who say their kids were authorized users on their accounts and then got turned down.
I put my son as an authorized signer on 2 of my major cards and my Target Red Card about 2 years ago. Not only does it help him build credit, but it allows him to pay for expenses that I agree to pay (such as gas for trips home) and I just pay the bill later instead of going to the hassle of transferring money to him.
Since then (without asking my opinion), he’s gotten at least 2 additional cards on his own. A Discover and a department store card.
And he’s still a student. He has a co-op position and he has listed those earnings as his income and they’ve given him the cards. Seems it isn’t too much more difficult than back when I was a student.
He does use the credit responsibly and his credit score is just slightly lower than mine.
I monitored both of my kids’ credit scores before they were self supporting. On both of their reports, I saw the 2 cards (Visa and AmEx) I had them as authorized users on their reports. Payment history on those cards did help them build their credit.
That’s not true. I am sure the couple had SS income, maybe pension, and dividend income. Otherwise, what did they live on? Income doesn’t always mean a salary from a job.
My mother was surprised when she didn’t qualify for property tax abatement because her total income was over the threshhold.
“I absolutely do not get the point of a debit card, as opposed to using a credit card and paying it off every month.”
For responsible young grads, the credit card option has more pros than cons. But the big pro of the debit card is that it carries built-in discipline. It doesn’t offer the temptation to spend up to the credit limit. Impulsive people can get into big trouble with that.
My D agrees with @Hanna. She is very responsible with money and has had a debit card for 4 years, since she was in 10th grade. But she refuses to get a credit card because she worries it’s too much of a temptation to spend money. I told her that in two years when she’s a senior a college, she will have to get one to start building up a credit history.
Yes, I, too am curious to understand how one’s kid benefits from being an authorized user on a parent’s card. I think one person used the terminology “had the credit transferred to D or S”. What exactly does this mean?
All 3 of mine have been authorized users on mine since their teens and, fortunately, it’s never been abused.
They all opened checking/debit accounts around the age of 16 when they began driving (two at Wells Fargo and one at BofA) and were then eligible for the banks’ credit cards when they applied 2-3 years later, by sophmore year of college. I’m not sure if they were eligible for them when they opened the checking accounts or if it helped that they had that period during which they showed they were responsible with their debit account. At around 23, my two older ones applied for a different cc (not through WF/BofA) that had better benefits and both received them.
Our kid likes the signing bonuses he gets from his CCards. It allows him lots of free travel–airplane tickets and hotel rooms. It also gives him cash. Those reasons are good enough for him. Since he’s been on his own financially for over 5 years and has awesome retirement savings as well as income, I just smile and nod. ;
:x
^^^See my post #23.
My kids became authorized users on our Visa card when they went away to school, as that is how they bought books and other parent-approved things. It’s not that our credit rating transfers, but our history of prompt payment transferred to them. They still are authorized users and still have the card. What if there’s a true emergency and their credit limit isn’t enough? Use our card and we will sort it out later. Let’s hope it’s never needed.
“she refuses to get a credit card because she worries it’s too much of a temptation to spend money.”
I did the exact same thing when I was younger. In retrospect, the people who are worried enough about temptation to avoid the credit card are probably not the people who are going to go nuts with a trip to Fiji when they do get the card. But at the time, I thought, “You know, there are people who get addicted to this. It’s like crack. I’ll just leave the crack alone.”
Studies have shown that people DO spend more on CCRds than cash and checks, so there IS definitely a downside to “easy $$$” via CCs.
^ I wonder if there’s some selection bias in those studies (never seem them, legitimate question).
I do not understand my generation’s aversion to credit cards but I’m definitely seeing it bite my friends in the behind as they’re trying to get decent cars and homes but can’t because their credit histories are only a few years old.
I suspect there MAY be some selection bias. That said, I likely spend more when I have cards than if it’s all checks and cash because cards are so easy and there’s s delay before you actually have to remove funds and pay the bill.
I figure as long as we live below our means and always pay the statement balance in full with no interest or finance charges, CCs can be a nice convenience. I like that they provide free travel insurance and extended warranty. Have used those extras a few times and was glad to have them.
I admit I also like the freebies I get as signing bonuses–cash, points and miles. We now have to figure out when and where we want to spend them. ;
@HImom agreed. I somehow got approved for an Amex at age 25, with very little income. I still have the card. The traditional Amex keeps you honest because it is a charge card, not a credit card. You have to pay the balance in full every month. So I basically can float charges for 30 days, which is nice. Sure I can do that with a cc, which I have, but there is always the temptation or reason not to pay the balance in full each month. With my Amex, I never put anything more than I can afford to pay off in 30 days.
The “credit card for under 21 set” rules changed in early 2010. Remember when they had tables set up on college campuses handing out applications with free giveaways? http://www.creditcards.com/credit-card-news/college-student-credit-card-law-1279.php
We started our s’s out with a gas station credit card in their names in HS, that could be used only at that station (and inside for snacks, as DS#2 discovered). It built up their credit (IIRC I opened it and then added them as additional users when they started driving to HS). We then put them on as additional users on our Discover card (which I’d had since it first started). DS’s were able to get their own cards before the ruled changed in 2010. One had a sneaky “interest from the day of purchase” that DS#1 didn’t notice. He cancelled it immediately when he got the bill. Might have been better to keep it open and not use it (for credit rating) but he was skeeved at the sneakiness buried in some fine print so cancelled. When he bought his first car after college (he had been driving an old minivan til then) they were amused that his credit dated back to when he was a year old (based on his being on my Discover card).
Both sons started with a credit card while in college. Citi has a card designed for students. My older son is very frugal . He uses his card carefully and pays it off each month. Younger son is not using his card, uses his bank debit card. I’d be more concerned with him, not so much running up a lot of debt, but just being careless and not paying the card on time.
The good thing is having gotten a card while in school, they have their own credit. They get a lot of card solicitations that come to the house for other cards. Helped to break that barrier of getting their first card.
“Sure I can do that with a cc, which I have, but there is always the temptation or reason not to pay the balance in full each month. With my Amex, I never put anything more than I can afford to pay off in 30 days.”
I don’t get this temptation, at all. In 30+ years of having credit cards, it has never occurred to me once that I shouldn’t pay the total. How is it possibly “tempting” to pay over and above whatever your items cost?
It makes as little sense to me as going to a restaurant, being handed a bill for (say) $40 and thinking … oh, well, I don’t have to pay all of this. I’ll pay $20 now and then I’ll pay $30 next month. Huh? If I didn’t have the $40, I shouldn’t have eaten the meal in the first place.
I really don’t see the difference between MC/Visa and Amex on this dimension. They are simply ways that you don’t have to carry wads of cash with you.
Wow, @jym626, I’ve never heard of such a thing! That is sneaky!
I made sure my kids got a credit card before heading off to college. They had no problem getting one on their own. All the credit union required was either proof of income or a secured card.
They don’t even bother waiting for the statement, they pay their bill off as they use it. A bit of overkill, yes, but at least they won’t get careless and forget to pay their bill!
Hopefully, this will be enough credit history when the time comes to get a car, rent a place, etc…