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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308367  
Subject: Re: Add a Child to Our Credit Card Account? Date: 10/29/2013 7:38 PM
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Has anyone added a child to their own credit card account? Or co-signed for a child to obtain a credit card? She has no job, so I don't know if the latter is possible.

No kids, so I can't help with the 'which one has worked with your kids' question. However, I can provide some information on the impacts:

Adding a child as an authorized user will help them build their credit score, assuming that the credit card is paid on time, has no other derogatory indicators and is kept at a low utilization %. When FICO was rolling out the new 'FICO 08' credit scoring model, they had said that they were no longer going to count authorized user accounts as part of the credit score, in order to prevent people from using 'piggybacking' services (paying a service to add themselves as an authorized user on someone else's good credit history in order to improve their own score). After a lot of discussion/complaints, in 2009, FICO backed off and said that they would continue to use authorized user accounts in calculating credit scores, but they were putting 'additional criteria' in place to help prevent 'piggybacking'. FICO has never said what the additional criteria are, but I would imagine that it would help to validate authorized user status if there is a same last name and/or same address. I suppose any other data that the credit bureau has that can tie you and your daughter together would also help validate an authorized user relationship.

As far as co-signing for your daughter vs. her getting a secured card - Since the CARD act of 2009 became law in February, 2010, anyone under 21 must have a parent or guardian as a co-signer to get a loan/line of credit/credit card, or they must show sufficient income to cover the credit obligation on their own. So, if your daughter doesn't have a job, even getting a secured card on her own is unlikely - she would need a co-signer. The CARD act also resulted in significant cuts in marketing cards to those under 21.

So, if you want her to get a credit card while she is under 21, it's likely going to be a card that you are financially responsible for - either as the primary account holder, or as a co-signer.

With that said, it could be a good idea to help your daughter build her credit score/credit history now. With a good credit score, if she has to take private student loans, she may be able to get lower rates. Having a longer credit score history should help her have a higher credit score in the future, so she can get better rates on any credit she needs/wants to use. Having a good credit history can also help her get lower car insurance rates, since many auto insurers use credit history in their pricing/risk models.

AJ
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