One of the most common concerns that people have when their children are in college is how to try to build their credit score. They hope that their child will be able to buy a car, rent an apartment or make whatever purchases they need to make when the time comes.
College is, in many ways, a transitional time for children. One of the most important aspects of that change has to do with their financial awareness. For the first time, children find that they have access to money that doesn’t come from a parent or a job, but from credit. In fact, the money from a credit card just seems to come out of nowhere. That is, of course, until they get their credit card bills and start to realize that nothing in this world is free.
One of the ways that parents will try to help their college student children to build their credit and develop a good credit score is by adding the child as an authorized user on one of their credit cards. This helps out the child’s credit rating. The parents may provide the child with an actual card that she can use while she’s away at college, ostensibly for emergencies.
Of course, what often happens is that the child considers something an “emergency” that the parents might not consider an emergency. Suddenly, the credit card is full of charges for the local pizzeria, and the parents need to have a little talk with the child.
Some parents will add their son or daughter as an authorized user on their credit card, but then not provide an actual card for the child. This doesn’t provide the opportunity for teaching lessons about financial responsibility, but it does increase the child’s credit score.
Sometimes, children may ask a parent to co-sign for a credit card or for a loan. This is also a good way for the child to build their credit score. The main thing to keep in mind here, however, is that the parents are fully responsible for that debt. If the child stops making payments, it will reflect negatively on the parents’ credit score.
Ultimately, the best thing parents can do for their college students is to help them become financially responsible, and helping them build a good credit score can be a part of that process.
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