By: Michael D.
Sure, your 16-year-old is probably not going to be buying a house or a car tomorrow, but when that time comes, wouldn't it be great if he or she had a stellar credit score? Parents: while that may be the best reason to consider adding your kid's name to your account, it should also come with an explicit set of rules.
1. The card is used for emergencies, such as car repairs or educationally related purchases.
2. The minimum amount or more must be paid on time.
3. A job must be maintained in order to pay for the purchases.
The average credit score in America is 695, but the highest possible FICO (credit scoring service) score is 850. So, there's room for improvement among our nation's citizens and improvement comes with knowledge.
Another reason to consider adding your kid to your credit card account is that it opens the door to begin the ongoing financial literacy conversation. They should know the ways a negative or poor credit score could impact their future lives. Rejection from potential landlords and even failed background checks due to credit are both possibilities. Even wireless carriers may be reluctant to offer better plans and contracts to those with credit blemishes.
The more kids learn about the value of money and the pitfalls of bad credit, the better choices they'll make in adulthood.