If you are not the age of 18 and you do not have a job, you will not be eligible for an online cash advances or payday loan. You can be working on your credit. With a little help from a parent, you can start building your credit at an early age. In order for any credit to build in a positive direction, the credit card account must remain in good standing.
Build credit at an early age to avoid online cash advances.
A parent may want to help their young adult by building their credit at an early age. Assigning their names as an authorized user will begin that process. An authorized user will have access to the account with the use of an individual card. This usage will be regulated by the parent (as it should be) to learn about responsible spending. In order for this account to be beneficial to the child’s credit, it must be kept in good standing. If there are late payments, the child will not be responsible for the money, but negative reports from a creditor will show up on their account as well.
If a parent is to make their child a joint owner, not only would negative reports hurt their young credit but he/she will also be responsible for making the payments. It would put the child in the same position as a co-signer would be if payments are not made. Limit the risks when trying to build credit.
As a child enters the adult world, there will be chances for credit building. Secured credit cards are one option to get the ball started. A security deposit is sent into the company to be used as collateral for the available balance. This account will most likely be in the young adult’s name only. The parents’ job is still not over. Life lessons can be taught as you oversee the use of the card and ensuring that payments are made on time. Each child is different, so depending on the financial maturity of your child, oversee the account as needed.
What can a parent do once a child has their own credit card?
- Sit down and talk about credit scores. What are they, how do they help and how can they hurt?
- Explain the reasons why a credit rating would go up.
- Go over all the reasons why a credit score would go down.
- Explain that the available limit is not required to be used.
- Define emergency spending.
- Instill a habit of timely payments.
- Create a budget for your child’s income.
- Create a savings account and stress the importance of something going into it each month.
Creating credit for your child the right way will open up doors when it is time for them to buy a car, rent an apartment, startup utility accounts or even to gain employment. Credit is everywhere, so starting on the right foot to build positive credit will build a strong financial foundation. Finding a need for cash advances means, that a budget or savings account are not working effectively. Stress the importance of cutting back if money is needed elsewhere. Debt is only useful if it helps your finances not hinders it.
