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Hope you’re enjoying your weekend!
I’m quite certain some of you know about this financial tip, trick and life hack. However, I’m equally certain that a large majority of people do not.
You can actually start building your children’s credit history while they are still “children.”
They can ride on the coattails of your long-established good credit history.
I’m sure you already know, but let me reiterate why this is so very important.
One of the advantages of having good credit is it gives consumers more buying power so they can avoid higher interest rates and have more buying power. Your credit score is a reflection of how well you manage your money. It measures your fiscal responsibility with the three credit bureaus Equifax, Experian and Transunion. Ranges depend on the credit scoring model, but generally show:
580 – 669 Fair Credit
670 – 739 Good Credit
740 – 799 Very Good Credit
800 – 850 Excellent Credit
Having good credit entails using credit equally as much as “not using” available credit and maintaining a good debt-to-credit ratio.
If you want your kids to be “loan-ready” to buy a home sooner rather later here are the steps you should take:
- Add your children as an authorized user on your credit card.
- Attach their Social Security Number to the card so the account history reports to the three credit bureaus.
- Also, you may want to add a credit limit just in case lol.
- Then be sure to “freeze” the credit bureaus afterwards to prevent identify theft.
- Teach them about basic finance and how credit works.
Many financial institutions have no age limit and some have a minimum age of 13 – 16 years old. So you’ll want to check with your bank or credit card company.
Also, it’s important that your kids establish and practice responsible credit behaviors:
- Pay bills on time.
- Pay off debts quickly.
- If you have a credit card balance, keep the balance well below the credit limit.
- Apply for credit cards in moderation keeping your debt-to-credit ratio in mind.
- If possible, avoid cancelling credit cards or do so in moderation as this shortens the length of your credit history.
- Check your credit reports regularly.
I should add a caveat and tell you that I am not a financial professional or an advisor, but I read a lot about finances. My own credit scores are well over 800… that didn’t happen by chance.
On a side note, if per chance you are in need of credit repair so you can be loan-ready, then don’t hesitate to reach out to me as we have accredited and legitimately established business partners that can help you.
And if you live in Florida, Financial Literacy will soon become a graduation requirement for students who enter high school in the 2023 – 2024 school year. Governor DeSantis signed this bill, titled the Dorothy L. Hukill Financial Literacy Act, on March, 22, 2022. Financial competency is a much-needed life skill for everyone and starting your children on their financial education as early as possible can only help them.
One more thing that I’ve seen parents do is invite their kids to live with them for a year or two, after they’ve joined the workforce, to save up for their first-time homeowner down payment!
As with any blog that I write, I do hope you’re able to take something away from it to benefit yourself. I’ll be dropping little tips, tricks and life hacks like this from time to time so stay tuned.
Thanks for stopping by and have a super day everyone!!!
Resources for you
https://thepointsguy.com/guide/children-authorized-users-credit-cards/
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<a href=”https://www.freepik.com/photos/parenthood”>Parenthood photo created by freepik – www.freepik.com</a>
