For those of us who have children or grandchildren, we should give them the best possible start towards establishing their credit and educate them on the correct ways of building and maintaining an excellent credit score. Having the ability to build credit at a young age is very important and helping them take action early on can increase their chances of being ahead of the curve. You may now be asking yourself, “So where do we begin?” “When is the best time?” “How young is too young to start building credit?” Below are some tips to help get you on track for their bright futures.
1. Educate Them: I don’t know about you, but when I was growing up, the school system did not teach us about building credit or borrowing money. Talk to your children!
2. Be the Loaner: As parents you can start loaning your children money and put them on a repayment plan. In the beginning of the month give them $100.00 to do what they want with. By the beginning of the next calendar month, they have to pay you back. This shows them value of a dollar and starts teaching them how credit works. Be nice, you don’t have to charge them interest!
3. The Credit Card: If you feel you can trust your child, co-sign for them or setup a secure credit card. This is the 1st, and best, step for your child towards building credit in their name and to becoming a responsible adult with their own money.
4. The Auto Loan: Once your child or grandchild turns 16 years old, they are probably very eager to begin driving and have their first car. Now for most parents or grandparents this is a very scary time. But co-signing for their first automobile could put them years ahead with their credit score. This a giant foundation for their next, and future, loans.
5. Student Loans: The cost of a college degree these days is through the roof. Unless your student has a large bankroll, your child or grandchild will most likely be paying for college with student loans. Student loans help build great credit, which is essential to getting approved for an apartment lease, mortgage or even a job.
Building an excellent credit score can take years—sometimes even ten or more. Helping your children or grandchildren start building their credit sooner can make a difference for their futures. But remember, educating and being there for them is the most important and biggest help of all.