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How to establish credit for your child

Building credit for your child will help them establish a positive credit history and empower them to borrow for big purchases later in life.

The good news is your child doesn't have to be 18 to start building credit. Get on the path to establishing credit for your child and help them secure a strong financial future.

Does your child have a credit score?

Typically, only people over the age of 18 have a credit score — but it is possible for minors to have a credit report. A person under 18 can have a credit report if:

  • Their identity was stolen and used to open one or more credit accounts.
  • A credit agency erroneously created a credit profile in the minor's name.
  • An adult added the minor as an authorized user or opened a joint account in the minor's name.

When can I start building credit for my child?

If you're interested in building your child's credit before they turn 18, you can explore adding them as an authorized user to one or more of your credit cards. There is no legal minimum age for adding a child as an authorized user, however you should check your credit card issuer's policies. Chase, for example, does not report the authorized user credit history of minors to the Credit Reporting Agencies. 

Other financial products like credit-builder loans have a minimum age of 18. And credit cards have even higher age standards: A person must be 21 to get a credit card on their own, unless they have an adult co-signer or can prove that their income is sufficient to make payments on the card.

Will adding your child to your credit card help establish her/his credit?

Adding a minor as an authorized user can help build the minor's credit. In some cases, card issuers report to the credit bureaus the payment histories of every individual who has a card in their name — cardmembers and authorized users alike. So adding your child as an authorized user can help a young person build credit: the minor gets to "piggyback" on the good credit behavior of the original cardmember.

Not every credit card company will report authorized user payment history to the credit bureaus, however, so talk to your card issuer to find out their policies.

The authorized user approach works both ways: Good credit behavior can enhance users' credit history, while bad behavior — such as missed payments — can hurt it. Only add a minor as an authorized user if you can be confident you'll make regular and on-time payments on the card.

What credit-building alternatives are there to adding your child as an authorized card user?

Beyond using the authorized user strategy, there are a few options for helping a child build credit. Note that all of these have a minimum age of 18.

Take out a personal loan

Personal loans often have high interest rates, but when there is a need and is used responsibly they can help borrowers establish credit. Taking out a small personal loan may help a young person enhance their credit mix in a healthy way. Only take out a loan in an amount that you know you can confidently pay back.

Take out a credit-builder loan

Secured credit-builder loans are designed for people who want to build a credit history. Repaying these loans could help credit-poor individuals establish good credit behavior and lands positive payments on the account owner's credit report. Credit-builder loans often come with non-refundable administrative fees as well as high interest rates, so be sure to consider which options might be best for you. Missed or late payments may also negatively affect your credit score, so be sure to commit to a payment plan that aligns with your lifestyle. Make sure to confirm that the lender that provides your credit-builder loan reports to the credit bureaus, since not all of them do so.

Sign up for a secured credit card

Secured credit cards, like credit-builder loans, help consumers move their credit in a positive direction. When a person opens a secured card, they make a small deposit that serves as collateral and effectively becomes their credit limit. Before committing to a secured credit card, be sure to do research on the types of fees, annual fees and/or interest rates that may come with the card. You should also confirm that the secured credit card you'd like to use reports activity to the credit bureaus since there may be some secured cards that do not.

How do you check your child's credit report?

The process of checking your child's credit report may vary, depending on the age of your child, but it's recommended to do so at least once before they turn 18. The Federal Trade Commission suggests that parents order a child's credit report when they turn 16.

If your child is over the age of 13:

It's possible to search for a credit history for anyone over the age of 13 using the AnnualCreditReport.com online tool. Federal regulations allow consumers to order one free credit report annually from each of the three credit bureaus (Equifax®, Experian® and TransUnion®).

If your child is under the age of 13:

For younger children, a parent or guardian must contact the credit bureaus by mail and provide certain identifying information to see if a credit report exists in the minor's name. Each of the three credit bureaus have different requirements, so be sure to contact them to find out more about the information you may need to provide to check if your underage child has a credit report.

Get started with building credit for your child

Building credit for your child will put them on the path to a better financial future. Add your child to one or more of your existing credit cards or, if they are of age, consider jointly opening or co-signing a loan or credit card with them. The key is for the child to practice good borrowing habits as they learn how to build their credit, so emphasize the importance of meeting payments on time each month.

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