Helping Your Child Build A Credit Score
A negative side effect of the new credit card reform bill is that people under the
age of 21 will be unable to get a credit card without proof of income or a parent or guardian to co-sign. While most of this is good news for parents and responsible credit advocates, the bad part is that it will be harder for your children to build their credit.While this prevents big banks from targeting a group of people who might not be as responsible or informed as they should be, it will be harder for young people to build their credit.
What is the big deal about building credit early? The only way to develop good credit is to be responsible on what you spend and to make payments on time. It is important to teach the young how much debt a person can handle before they end up needing credit card debt help. Also, building a good credit score now will help them when they decide to make big purchases that require credit when older, such as getting a mortgage for a home, an auto loan, or even a loan to start a business.
Here are two things that parents can do to assist their children's credit:
1. Authorize your son or daughter on your credit account. This means that your child will get a copy of your credit cardlinked to your credit card account, and will be able to use it. This can also go towards increasing your child's credit score. Though you may work out a different payment plan with your child, you will be ultimately responsible for whatever charges that your child makes. In this sense, it is important to be both cautious and educational. Do not let your child use your card if you have not discussed appropriate spending habits.
2. Be a co-signer for your childs credit card. If you dont want to give your son or daughter access to your credit card account, you can co-sign for them to have their own. As a co-signer, though, you will be responsible for their debt if they fall behind on payments.
It is true that credit cards can be an educational tool for responsible spending, but it is just as true that a credit card--if used unwisely--can lead to very serious problems. Do you have credit card debt that potentially hurts your son or daughter's credit? Chapter 7 bankruptcy is an option that in some cases eliminates credit card debt. Look for as much free information from experienced lawyers in your area if you are considering bankruptcy.
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