There are many steps that you can take to help set your child up for a more successful future, and some of them may not even cost you anything. Whether you have a young child or a college student there are always things that can be done to help set them on the best trajectory for success. My absolute favorite is helping to build their credit score.
Your credit score is an absolutely crucial part of being an adult. Whether you are applying for an apartment, trying to buy a car or purchasing a home your credit score is going to be a significant factor. Here is the issue, time is your greatest asset when building your credit score. As every young person knows it takes years to build your credit. In fact, one of the biggest factors that contributes to your credit score is length of credit history. Starting early is imperative.
By having a joint credit card with your child as an authorized user you can give them a serious head start on building their credit score. Every time you have a balance and pay it off on time (always being sure to pay off the balance every month) you are lengthening and improving their credit history. Most all credit card companies will allow you to add a minor as an authorized user on a credit card, so if you start when the child is young they can have the credit score of a 30 year old as a college student. If you want to spice things up even more, adding them as a user on all of your cards only compounds the benefit by having more on time payments.
In addition, once your child is in college this is a great way to start teaching them some adult responsibilities. In my opinion, the education system does a very poor job of preparing our youth for life after school, from a financial perspective. Kids don’t understand insurance, mortgages, credit scores and many don’t even know how to write a check. Forcing them to consider their credit score, and having them monitor statements so that they can see the interest costs associated with not paying off the entire balance on their card every month, can only help.
If you’re looking for a simple, and free, way to really give your kids a head start on life this is a no brainer. I promise that when your child goes to buy their first home and their credit score is already over 700 you’re going to be getting a thank you call.
For more information on the services that we offer please visit www.austinwealthsolutions.com.
Cody A. Austin
Austin Wealth Solutions