Well my son turns 18 in September and I want to have him sart out on the right foot in everything, including credit. Since I can't remember how I did it, (I think it was different then in the '60s) how do you sart to build credit. A secured card, a college card (he's going to start in the fall) what? Furthermore he has a money management problem so I'm scared to just let him loose and would prefer to "direct" him into something that makes sense. Does anyone have any ideas?
I would of suggested adding him as an authorized user to your existing accounts; and make sure that he don't use them, just let these contribute to improving his scores over time. If he has money management problems; would definitely warn him from just running right out to get credit cards. Better would be to start up saving or checking account; and take out installment loan backed by the savings account. And maybe something to the point of direct withdrawl form the checking / savings account to pay the loan each month. These are the best types of credit to get added on the reports for scoring. This is just a few ideas; can even talk with a loan officer at local bank or credit union for other ideas. Also if he has money coming in, set up for direct deposit of his paychecks or other sources of income to the bank. If you don't think him capable of restaining himself on the credit cards, then best at this time for him to avoid establishing any until letter. To many preditory credit card companies out there, only one time late, can result in interest rates as high as 30% on balances. So he needs to learn more first about this part - want to be responsible and interested in doing the math and thinking in a better means of what saves the most money. Best of wishes,
I was going to suggest the same thing! Assuming your credit is well-established, adding him as AU would allow him to benefit from you good credit w/out the tempations of a CC at such a young age. Learning to properly maintain a checking acct. is a skill that MANY people never learn, and ends up getting them into a lot of trouble. Help him open a checking and savings acct. Then help him maintain an accurate register, and LEARN TO BALANCE MONTHLY WITH EACH STATEMENT. My oldest son is 16, and will getting a PT job. Maintaining a checking acct. will be at the top his list of new skills this year.
Ill agree with the others here. At 18 i immediattely started my credit by getting approved with a car loan. Shortly thereafter an unsecured loan for a computer for school. Then a loan for a washer/dryer. Next thing you know, im in my first year of college and pregnant. Now i know your son isnt at risk for this, but you NEVER knwo what can happen even with those that are wonderful at money management. I suggest a savings and checking account with a debit card. Once he can manage that properly with no overdrafts, then maybe a small loan with automatic payment. And an AU on your cards is an excellent idea. My parents didnt do this for me and now as a young single mother, with terrible credit from not being able to make payments on ANYTHING my entire pregnancy and the first 6 months or so and then slow pays for the next 2 years, well... you can see why im here Good luck. Glad youre helping him out. Also... there are money and credit management classes available at most community colleges. Check your local area and get him in them for some financial responsibility education! Rain...
