How to Help Your Child Build Good Credit Score

Every parent wants what’s best for their kids, including a good futureSetting a good credit score for your child is one of the ways to secure their future But kids don’t have any financial obligations,money management is something they know nothing about.

It’s your duty as a parent to couch them on financial planningthe importance of a good credit scoreHere is a simple guide on how you can help your child build a good credit score.

1Start Educating Them Early About Finances

If you feel that your young adult is ready to build credit, don’t hesitate to take them through it as early as possible.

Show them simple habits which can help them maintain an excellent credit scoreSome of the simple tricks you can teach them to include paying bills on time, spending below their means,avoid opening more accounts than they can manage.

Show them these at an early age so they can grow up to become responsible about their finances.

2Add Your Kid as an Authorized User on Your Credit Card

Add your kid as an authorized user of your credit card to see how responsible they can be with their spendingBy doing so, you’ll also be helping them to establish a good credit record.

Before you add them, ensure you confirm if your kids’ activities are reported in the credit bureausIf it’s reported, this is a good way to get them started with good credit history.

If your young adult is authorized, they can independently use your card for online purchasesMake them responsible by taking them through the credit card statementIf you feel like they’re not accountablemature enough to handle credit cards, deny them access to the account.

3Teach them Real-Life Consequences of Bad Credit

Teach your kids the real consequences they’d face if they had a bad credit scoreLet them know why not being able to access loans when they badly need one can mess them upMake sure they’re conversant with poor credit situations.

But they must also understand that if you have poor credit, you can still qualify for a bad credit loanYour children should understand the advantages of good financial managementthe repercussions of having a bad credit score.

4Demonstrate To Them How Credit Card Works

You should explain how a credit card works to avoid any misconceptions among themThey should understand that they should repay their credit cards early to develop a good credit scoreThis will also help them know what they can dowhat they can’t do with a credit card.

5Let Them Open a CheckingSavings Account

Kid’s checkingsaving account introduces them to the financial worldHelp your children to open an account while they’re youngshow them how it worksThey can make good use of the savings account by depositing any allowancespresents they receive in monetary value.

Their credit score will improve as the account growsTalk to them about the penalties in case they overdraw or bounce checksThis will enable them to be more responsible for their spending.