Teenagers needing to build credit !!

Submitted by Fasfeed on Wed, 02/20/2008 - 01:58

I have two teenage boys and I am ready to help them to start building their credit .I am really looking forward to giving them a better start than I gave myself and I am not looking forward to having to cosign for any accounts. Does anyone have any suggestion towards the best way to start building credit when starting out with a clean slate . I am trying to keep them with minimum debt ,while still achieving to have an excellent credit score by age 21. Suggestions on what type of accounts to apply for with no credit history would be great. My boys are 17 and 15.

You could open a credit union account or a bank account for them and then once they have enough money in the account, say $500, have them apply for a loan and use the account as collateral. You will pay more intrest then the bank account is drawing, but if they have $500 in there and take out a loan for like $400 and put it in the account also, make payments for like six months to establish a payment history and then pull the pay off amount out and then pay it off, this would give them a credit history. You may still have to co sign because of their age, this is something that you would have to discuss with the financial institution that you are dealing with.

Wed, 02/20/2008 - 02:08 Permalink

Try googling youth and credit, I think the major issue will be is to keep them from screwing up there credit before they are of age. That is where alot of youth go wrong, especially with credit cards.

Wed, 02/20/2008 - 02:14 Permalink

First help them learn how to maintain an account if opened. Once they know I am sure they will be able to handle accounts easily. Responsibility comes from learning and experience.

Wed, 02/20/2008 - 07:02 Permalink

Rent the movie "Maxed Out". It is a documentary about credit cards and college kids. it is a very powerful movie that brings up many things to discuss. I watched it with my 15 year old daughter and we'd pause it to talk about what we just heard or saw - it was a good start and opened her eyes to how little she knows, even if she is a teenager that "knows it all" ;)

Wed, 02/20/2008 - 17:20 Permalink
Anonymous (not verified)

There really isnt much you can do before they turn 18 and establish a history. I think AU use has been phased out now.

Wed, 02/20/2008 - 18:42 Permalink

I really was not planning to make any moves until they actually turn 18,which will be about 8 months for my 17 year old. Iam really trying to get a good head start.Will definitly look into renting [MAXED OUT]. I was thinking about starting out with a secured credit card.Open to all suggestions. THANKS!!

Thu, 02/21/2008 - 02:39 Permalink

Are they going to college? They can most likely get a low credit student card. My fiance started with a 1st Financial card with a $700 limit. A couple years later its up to $7000 and she has high 700 scores.

If you are looking into secured cards, check out the 99/500 Bank of America card. It's partially secured and partially unsecured. National City and Orchard also have good secured cards, and I know for a fact NC reports as unsecured which is excellent! Only downside is you have to mail in your app.

If interested let me know and I can provide you with proper links.

Thu, 02/21/2008 - 03:38 Permalink
tvshowsondvd (not verified)

Hi please suggest how can I convert my favorite TV programs
Then view them at my time of convenience?

Mon, 02/25/2008 - 09:18 Permalink
Anonymous (not verified)

If they are going into a collage Wells Fargo is pretty open with the student's credit cards. They will give them probably 300 as a start, but it will be almost for sure. The other thing is that the banks are not doing a research if the kids are really students or not. probably they not gonna ask even for e student ID, just come up with some student id number. make sure that it has the ssame format as a real collage numbers. DONT LET THE KIDS SPENDING THE MONEY AS THE LUNCH MONEY YOU ARE GIVING THEM. Thats what they are doing

Mon, 02/25/2008 - 15:14 Permalink

Hi please suggest how can I convert my favorite TV programs
Then view them at my time of convenience?

When I see posts like this, I assume they googled something and ended up here not realizing where they were. However, this one has me stumped - I wonder what her search term was AND if she'll ever find us again ;)

Google: My DVD player is 60 days late on it's car payment and the collectors are calling my TV

Mon, 02/25/2008 - 21:22 Permalink
emanace78 (not verified)

add them to ur creditcards as authurized users they will get a creditcard each, but dont give it to them, their credit would built from ur credit as long as u dont let them use the credit cards.

Fri, 03/14/2008 - 04:32 Permalink

This is considered adding on as authorized user or piggybacking. This method is no longer effective due to the fair issac act.This would have been my first option, but thanks for the post.

Mon, 03/17/2008 - 00:50 Permalink

get them low limit credit cards, it's also important that they understand the dangers of credit cards if misused.

Mon, 03/17/2008 - 01:19 Permalink

Hi Jmacus

Welcome on board!! Its great to see you here.
I think a teen ager savings account can help.

Mon, 03/17/2008 - 10:17 Permalink

I'm not a good judge of teenage credit use -- my opinion is:

As a parent, I'd want them using my credit card for emergency use. Until they leave home, I will provide for their credit needs. I don't believe that they need 'excellent credit' as soon as they hit 21 years of age.

I'm 55, and I didn't get my first credit card until I was 30-something. I realize that times have changed radically. Use of credit demands the ability to pay it back -- I want the kids to have income, steady income. In order to pay a car loan, the insurance for it, and rent, they need steady income. Their bank will issue them a credit/debit card which they can use for their internet purchasing -- but, other than emergency money, what else do they need a credit card for? --- furniture and stuff, I guess. Providing credit cards to young folks without the ability to pay routine bills is a recipe for disaster -- they'll be behind the credit 8-ball for years.

The secured, or pre-paid, credit cards offered by most large banks to people trying to re-establish good credit ar a good idea, too. You can have them open the account with the minimum deposit, maybe $300. Then, as they spend money by using the card, the balance falls and has to be re-'upped' much like a pre-paid phone. The account does report otthe credit bureaus just like a normal card; however, these are low-credit-limit cards -- the object is to have high credit limits, using less than half of the available credit.

Next, a car installment loan is the best way to get a good, steady credit history -- everyone has one, and you have to pay it on time....not "if's, and's, or but's!" Start with an economical used car loan, and you can make the initial payment! Just don't co-sign if you are wary! Remember, the same bank that issued the pre-paid credit card, that also has the teen signed up in a checking account debit card (and savings account, possibly), will also want to be the source for his/her used car loan, too. Once a bank has started doing business with you, it wants to continue doing business with you --- more and more interest coming in to them!!! Ask, ask, ask!! Normally, they will give, give, give!!!

Mon, 03/17/2008 - 18:36 Permalink

Hi please suggest how can I convert my favorite TV programs
Then view them at my time of convenience?

When I see posts like this, I assume they googled something and ended up here not realizing where they were. However, this one has me stumped - I wonder what her search term was AND if she'll ever find us again

Google: My DVD player is 60 days late on it's car payment and the collectors are calling my TV[/quote:03735f064e]

rofl, I fell in the floor on that one. Thats going in my sig.

Wed, 03/26/2008 - 21:55 Permalink

yes, get the ones with the low limits so you won't find yourself in trouble.

Fri, 03/28/2008 - 07:21 Permalink

When I was 20 years old I worked for Sears in their credit department. When they were having a promotion to get new credit customers. The credit department where I worked had many young people in it (between 18-21) and they offered credit cards to any of us who wanted them. We were all given $100 limits and they explained how if we charged something and paid on time, etc. we would be building our own future credit rating.

I always thought this was the coolest thing and wondered if they still do it. A great way for young people to build credit.

Sat, 07/26/2008 - 05:48 Permalink

Credit and young adults can be a double edged sword. If you add your kids to your accounts while they live with you (you don't have to give them the card just add them to build credit) you could be helping them quite a bit by helping them get cheaper car payments etc when they move out. On the other hand they will have the opportunity to put themselves in much deeper in debt if they default on a 1,000 balance than a 300 balance.

Sometimes it is better to let them build credit for themselves so they understand it's importance

Sat, 07/26/2008 - 06:52 Permalink

This is all very true. However, this was over 30 years go and it was a different world Not not that credit building is different, but young people have different and more opportunities for credit, jobs, education, etc.

Sat, 07/26/2008 - 07:19 Permalink

I like your views of this matter CM. It really is a double edged sword. As soon as my son was on his own the first thing that entered his mind was credit card. I have filled him with as much knowledge on the pros and cons of the credit world. Hope he was listening.

Sun, 07/27/2008 - 01:45 Permalink

I too agree with you CMBV. But I would also prefer to provide them with a secured credit card because with a secured credit card your children can purchase upto the amount deposited with the credit card company. We need to teach them the ill effects of overspending so that they learn how to build up a good credit history with the credit card.

Tue, 07/29/2008 - 09:20 Permalink

Also a really good idea CArol. I am also a firm believedr in making them help themselves. Todays teenagers want things the easy way. Most would rather walk up to mom and dad and say "Hey dogg reload this, k?" At my house if my child wants something bad enough it is gonna be a 50/50 deal unless it is a holiday. So you coul,d actually teach two valuable lessons here with the preloaded card. 1. how to use credit and 2. how to survive in the world. Parents won't always be around to support their kids. The preloaded card is an excellent idea as long as you get them to help load it.

Tue, 07/29/2008 - 12:59 Permalink