Does anyone have ideas for establishing credit for a child. My son is not quite 2 years old. Is there anything I can open in his name and SSN so that he can have a 30 year credit history by the time he's 32? Thank you all for your input! NuB
Re: Re: Re: Establishing a childs credit Savings account...NOT MUCH ELSE... (UGMA) Uniform Gift to Minors Act UGMA. Laws adopted by most states allowing an adult to contribute to a custodial account in a minor's name without having to establish a trust or name a legal guardian. Thus, minors can have securities bought and money invested in their names, but the custodian is responsible for managing the funds in the account. The custodian has a fiduciary duty to manage the account prudently, but once the minor reaches the age of majority, he/she has complete rights to the funds in the account. The assets are the legal property of the minor, and the parent has no legal control over the uses of the proceeds of the account. All withdrawals from the account are taxed at the minor's rate. Putting money into a UGMA account can negatively impact the chances for financial aid, since financial aid officers weigh children's assets much more heavily than parents' assets.
Re: Re: Re: Establishing a childs credit Yes George! I was just reading about UMGA on USAA's website. I'm going to take a closer look at the details you listed. Am thinking about it. Savings is a given. I just wanted something that would show up on his credit reports giving him history. Will the AU dissappear from his records when the account is closed......or will putting him as an AU now give him history from this day forward? Thank you so much for taking the time out to answer my questions. NuB
Re: Re: Re: Re: Establishing a childs credit "IF" you keep it open...IT WILL STAY!!! "IF" you ever close it...it "SHOULD" stay for 7-10 years after that... WARNING!!! NEVER MAKE A LATE PAYMENT...OR GO OVER-LIMIT!!! HE WILL BENEFIT FROM IT...BUT if you mess up...
Re: Re: Re: Re: Re: Establishing a childs credit ... I wouldn't do that to him! Nor myself anymore! I'm want to get him established so he doesn't have some of the same problems I do. You know.... "If only I knew then..." I'll try to spare him! Thanks again!
Re: Re: Re: Re: Re: Establishing a The savings (or UGMA) won't show on his credit report. Be careful of an UGMA. The "G" stands for GIFT. When they turn 18, they get the money, no strings attached. Better to save in an account in your name but keep it earmarked for the child. That way, when he (or she) turns 18, if you don't think they're responsible enough, you don't have to give them the money. If you want to save for college, look at a 529 plan.
Re: Re: Re: Re: Re: Establishing a I wouldn't dare touch my childs ssn's to start their credit. They need to do that for themselves and can start once they hit their teen years. OUr son started his in his first year of college.
Re: Re: Re: Re: Re: Establishing a Here are a couple of interesting articles about why you shouldn't save money in the child's name: Article about saving for college. What to do if you have an UGMA.
Re: Re: Re: Re: Re: Establishing a I wonder if a creditor would think something was wrong if there was a credit line as old as the child. They might think that there is some kind of fraud going on. The child wouldn't be responsible for any debts incurred before age 18. That's why a lot of creditors won't add them on. I think that itsmymoney had the right idea--wait until college to get something in their own name. But teach them the principles of good money management.
Re: Re: Re: Re: Re: Establishing a here is my thought: fico's may not even matter by the time your child grows up. children cannot enter into contractual obligations, and i do not know of a creditor who would put a child on even as an AU - only savings accounts. i think you could do more harm than good by trying to beat the system.
Re: Re: Re: Re: Re: Establishing a Thank you all for your advice! I recall reading a post here from someone who's score was really high, and it was actually due to the fact that he was an AU on one of his parents cards. I think he was 19. It would be nice to think that the FICO will be obsolete by the time he would need it. I'm not in any way looking to commit fraud! Just trying to set my son up for something a little positive. Of course I'm going to teach him his own responsible money management skills. I'm not going to give him everything! Just wanted to give him a good start and he can go from there! I will read the links. George, I was looking into the educational gift account, that turn over the the child by the age of 30 if not used on education before that. I see I have a link to read about that as well. Thanks all! NuB
Re: Re: Re: Re: Re: Establishing a The primary reason my FICO is 765 (was 803) after recent repair efforts is the fact that I was put on as an AU on his AMEX. Since he opened the account in 1982, I have a credit history going back 21 years at age 34. Good idea!
Re: Establishing a lets be realistic - fico scores weren't even an issue in 1982, so obviously is was more to teach that person responsibility. they probably won't be an issue when your child is 34 - it will be something else. since you don't know what financial catastrophe could be lurking around the corner, you could damage his credit before he is legally able to obtain it on his own. if you teach a child financial responsibility - you won't have to worry about their FICO. i see lots of 20-23 year olds with 700+ ficos and only 2-5 yr histories.
Re: Establishing a or, you know you could just keep the cc till he is 18 and add him as an AU then. Instant credit history
Re: Establishing a Nervous, Again after reading this, I hope I did not harsh, that was not my intention. I understand you are only looking for his best interest, but he needs to go thru it. There were several offers of cc's at college, Sonnyboy opened 1, we then added him as an AU to our AM EX, about a year later, he got his own, worked part-time while going to college, bought our Ford Bronco from us with a loan from the bank, imagine how we felt when we realized he didn't even need a co-signer! He is now 26, has his own mortgage on a $200,000 home and a 4 year degree YAY!!!! You see, your child will do just fine with great guidance, and if you ask why we, the parents are on this board, DH lost his EXCELLENT paying job to a corporate buyout in a field that is quite narrow and nobody was nor is still hiring, so we have learned never cornhole yourself into one career field. We are now 48 and 51, NEVER EVER dreamed that this is the position we would be in, however, we have not disclosed this to either of our boys, since we don't want their money or sympathy nor did we want them worrying about US. We have these boards here for pity parties, LOL!!!
