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Money basics

I want to help my daughter start her credit history. What should I do?

First, order a copy of her credit reports from Equifax, Experian, TransUnion – the three largest national credit reporting agencies. You can order the reports free every 12 months at annualcreditreport.com. Even if she’s never applied for credit before, it’s a good idea to order the reports to check for:

  • Mistakes – be sure her personal information like her name, address and Social Security number is correct. Also see if the report contains accounts she did not open or debts that don’t belong to her.
  • Signs of identity theft – like accounts she never opened, that are listed as late or unpaid.

If you find mistakes, get them corrected right away. Once you’re sure your daughter is starting with a clean slate, there are a number of ways she can start building her credit. Your credit history starts when creditors begin reporting information about you to the consumer reporting agencies. So some things, like debit card use or paying utility bills, may not build credit. Here are some options you can consider:

  • Secured credit cards.These typically require a cash security deposit. The larger the security deposit, the higher the credit limit. Secured cards are often used to build credit history.
  • Authorized user.You can add your daughter to your credit card account as an authorized user. If you have a good credit record, adding her to the account can help boost her credit score. But, if you have a bad credit history, it would reflect poorly on her too. Also, you will owe the amount that she charges.
  • Store cards.These are cards that she can use at only one store – like a department store – or affiliates of that store. Store cards are typically easier to get than general purpose cards, but they often have high interest rates.
  • Your child might also ask you to co-sign or become a joint applicant with her on a card. Caution: If you co-sign, any late payments she makes will be reported on your credit card too. 

For more money activities for your child, download the Money As You Grow activities flier, which describes money milestones for kids at various ages.

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