Build credit

[2thDoc]

so...son2 asking if he should get a credit card to "build some credit" while in college.
I know nothing of this world. What say ye banking/credit people?

[Bad Habit]

Silver spoon people know not and care not about "credit"
Why didn't you pass the spoon to your son?

[theoldblackdog]

Not a banking or credit person but my brother is and he would absolutely say to do it IF he is going to use it properly and make the payments that come with it as well. Everything is based on credit these days so if he’s level headed then why not get a head start on building a good credit.

Side note once I was married my wife had little to no credit, one credit card with a $1000 limit was all. When we went to buy a house I could get a better rate by myself than with her on the mortgage as well because she didn’t have any credit history. I made the decision to put her on the mortgage just to help her build credit in case something happened to me

[First Coat]

I did when I was in college for that reason but you have to pay it off every month. There are those that try to do it and fail miserably and get "addicted" to free money. The result being the credit fail, tough to recover from.

[Phone Man]

Tell him like my parents told me. If you dont have money in your account to pay for it, dont put it on credit card. Mine was and still is for emergencies or buying stuff online. But they can put a person in a bad way real quick.

[theoldblackdog]

Tell him like my parents told me. If you dont have money in your account to pay for it, dont put it on credit card. Mine was and still is for emergencies or buying stuff online. But they can put a person in a bad way real quick.

I get what you are saying 100%, but when absolutely everything is tied to your credit, vehicles, renting an apartment, even heard of it for cell phone bills, then I think you need one and you have to use it regularly and not just for emergencies. Think the younger generations have no choice but to build credit

[BCR3]

Going through this with son number one now. Like others have said get one with $1,000 limit and make sure he manages it properly and pays it off each month.

[scatter shot]

A FICO score is absolutely important and Dave Ramsey is an idiot.

Credit is used to underwrite many things including home and auto insurance. Bad credit or no credit could cost you hundreds more a year in premiums or could actually make you ineligible for coverage.
I think it's bullshit but I don't make the rules, please don't shoot the messenger.

[wob]

My son is 17, and we'll be looking at doing something similar soon. I'm thinking that I'll get him a credit card with a low limit to use only for gas and put it on autopay every month tied to his checking account. I'll also tie his checking account to an automatic overdraft LOC. That way, the credit card bill will always get paid, and if he does get into trouble and OD his checking account, I'll know, since I can see his account on my app.

He works and doesn't spend a lot, so I'm not super concerned about him. My daughter, on the other hand...

[JJ1965]

My son got a couple credit cards when he got his first part time job. He is 23 now and has used the cards carefully. He had rewards cards, used them monthly and pays them off before they are due, and has never paid a cent of interest. The car we got him in high school was in my name end his, and was paid off early. His credit score is over 800 now. I would recommend it if he is going to be very careful and not go crazy.

I think the main thing is to never carry a balance from month to month. The more available revolving credit he has the higher his score will he.

[trkykilr]

I think its a good idea. Your boys are responsible and won’t run the card up. Start with a $1k limit. If he is responsible, they will offer to increase it to $5k pretty shortly. Let him do it, assuming he has done what he said he would do. Higher credit limits with lower balances/use and timely payment are better for your credit.

[scatter shot]

Another option to build credit for your kid is to take them to Best Buy and buy them a computer on credit in their name and cosign with them.
I did that with my son many years ago and he had a 780 FICO when he was 18 years old. Bought his first home when he was 20.

[JJ1965]

Oh, and don’t necessarily go for a low limit card. If he has self control, the higher the limit the better for his score, as long as he pays the balance off monthly.

You can get cards with up to 3-4% rewards on gas and food, which saves a lot.

[MolliesMaster]

Yes. My first one was a $500 limit. I paid for my gas with it every week and paid it off at the end of the month. Still only have 1 credit card, albeit the limit has gone up some.

They check your credit for just about everything these days even utilities.

[Bad Habit]

Seriously- I started with zero money but good advice- build and protect your credit score and life will be much easier.

I worked and saved money- went down to a finance company and took out a loan that I could re-pay with my savings, paid a few payments then paid it off.
Repeated a few times until I had a great credit score and have protected it my entire life.

Credit is a necessary evil these days and credit cards are a big part of the equation. It's also the easiest part to let get away from you, especially when times get tough.
I got my first CC because you had to have one to rent a car or reserve a hotel room back then- also for dire emergencies.

Your son needs to have a sit down with his banker and plan out how to best build- and protect- his credit, without building debt, while he is going to college.
What type of income source does he have?

[Geetch]

My company even checks credit scores for certain roles we hire for (Accounting, FP&A, etc.).

Credit is a must. If nothing else it'll teach discipline the easy or hard way.

[smitch320]

I took out a share loan in highschool to start building my credit. Borrowed money from myself and paid it back. Credit cards are dangerous in college.

[darealdeal]

Easy way to explain this.

Use it pay it off and if you don't it will cost him in the long run more money as well as hurt his credit. If you actually look into it... It is safer to use a credit card now vs a debit card. If someone steals your info on the credit card you have an agreement with that company that does not hold you liable for the charges posted to the account that you did not charge. With a debit card you have only a certain amount that they will return. Depending on his age you can set it up to notify you as well when a big purchase is made on it to keep an eye on them.

[Remy]

He may have to get a secured CC if he doesn’t have any prior credit. Your local bank can help with that. Also, adding him as an authorized user on one of your credit cards will let him piggy back off of your credit (assuming it’s good)

Also, I believe credit cards are like guns, it’s good to teach your kids to use them responsibly when theyre young and still under your watch.

[CUfisherman]

One of the criteria for credit score is the length of credit history so it is beneficial to start early if possible. Also if you do get a "first" credit card/account make sure you keep it active as this is a key number. I have a Cabelas credit card I used in college to get free shipping on my first set of waders that I keep active by making a purchase once a year on it.

This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
https://www.myfico.com/credit-educat...r-credit-score