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Thxlbx

18 Year old Daughter no credit getting started

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Hello All,

 

My oldest daughter is 18 almost 19, and has had a job for about 10 months now.  She has had a checking and savings account for about that time as well.  Both have over $1500 in each account.


She is a student and works around 15-20 hours a week.

 

What would be the best option for her in terms of starting her credit profile?  Would a student credit card be best, or would it be best for me to add her as an AU one of my cards?  I have a Cap1 QS with a $4600 limit that has no balance and is hardly ever used.  Would it best for her to be an AU and pay it off every moths for six months or so and then apply for her own card?

 

Thanks in advice for the advice!

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Read this^^^ for starters.

 

Edited by Kat58

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18 minutes ago, Thxlbx said:

Thank You!  Reading now!

You're welcome :)

 

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Hi there,

 

First. It's much easier to build on zero credit, than to rebuild after bad credit!

 

After many lessons learned the hard way with my own credit, I have had the opportunity to help my partner build his. He started with literally no credit at all a bit over a year ago. First thing I had him do was go to a local credit union and set up a secured personal loan with a savings account. We put an extra $60 or so (will explain why below) into the savings account, had the CU set the loan payments to get autopaid out of the savings, and then just let it do its thing.

The monthly payment was less than $60, so we just made sure there was more than enough *available* balance in the savings to cover 1 monthly payment. Each month the savings balance reduced as the loan was auto-paid. Doing this will not tie up the money because you get it back in the form of the loan. Once the loan is paid off, you can do whatever you want with the account. A higher amount will look better on the credit report, but any personal loan that is always paid on time is a great, very inexpensive way to get a positive tradeline on an empty credit report. Some credit unions may not even do a hard inquiry since the loan is secured.

 

Example: $1000 loan for 2 years. If the monthly payment will be $45, then put $1060 into the savings and have the banker set it up to autopay the loan payment each month. The savings account balance will reduce as the loan gets paid off. You get the $1000 back when the loan is funded. So it's $60 out of pocket to do this and have an almost fool-proof way to get a positive tradeline. You could do this with any amount.

 

Next, I added him as an authorized user on my credit card. After a few months with the loan reporting and the AU account, he had over 700 credit score and was able to get his own credit card. An easy one to get is Capital One Quicksilver - low annual fee and cash back. I taught him what I learned about paying down the balance each month. Discover IT is also an easier card to get, and has cash back.

More recently, he's been able to get a car loan and an Amex card as well, and his credit scores have stayed around 700. This will improve with time as the car loan gets paid down and his accounts age. We started work on his credit around the end of 2017. From here it's just a matter of continuing to add tradelines to continue building his file, and managing the tradelines properly.

I am doing the same with mine - I've cleaned up the bad stuff, gotten all but one collection paid and deleted, and have been building good tradelines.

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