CWG Insight Series: Build Your Kid's Credit Early

As adults, we have learned that you need credit to finance purchases. We also know the better your credit score, the better the terms on that financing. The difference between an excellent score versus just a good score can mean thousands of dollars saved over the life of a loan.

Traditionally, adolescents start building their credit with their first credit card or auto loan, often co-signed by parents. After building a strong enough credit history, they will qualify to purchase a home with a mortgage. This credit building process often takes years before you are considered a strong lending candidate.

Most of our clients set their children up for future success by saving towards their college educations. What if you could also build their credit history so that by the time they were ready to make their first major purchase, they would get great lending rates, and better yet, you wouldn’t have to co-sign for them?

Building your child’s credit can be as easy as adding them as an authorized user on your credit card. When the card comes in the mail with your child’s name on it, store it in a safe place. From then on, when you make transactions on your card and pay it off monthly, that’s not only strengthening your credit, but it’s also counting on theirs.

There is no overarching legal age requirement for adding someone as an authorized user. However, card issuers do have different rules, policies, and processes for adding minors to card accounts. In the chart below, we outline different bank policies for adding authorized users. Most banks make it easy to add an authorized user online while logged into your account or by calling the number on the back of your card.

Nick Kolbenschlag
Chief Executive Officer & Co-Founder