How banks work


Getting Good Credit For Your Child

Is your college-age child finding itThis can be very beneficial, because
difficult to get a credit card? Manybanks will often issue credit cards to
students face a catch-22 when applyingclients who have proved, over time, to
for their first card. Some cardbe financially responsible.
companies market their productsRetail Cards
specifically to students, yet theLike bank cards, credit cards from
students often get rejected when theyretail stores are relatively easy to
apply. Why? Insufficient credit history.obtain. Try to select a store that your
If you don't have credit, many companieschild will shop at, but not one where
won't extend credit to you. Thus, theyou think they might be tempted to spend
dreaded credit catch-22.beyond their means. Make sure your child
If you're a parent who is concernedunderstands that the key to building a
about your child's credit score, takegood credit history is to charge a small
heart. Here are five strategies foramount every month, then pay off the
getting them started down the path tobalance in full.
good credit.Secured Cards
Car LoansSecured credit cards are another option
Teenagers eventually need cars, and itfor teens and young adults who are
often falls to parents to provide thosetrying to build up their credit. These
cars. But the teens should be involvedcards are secured by a deposit made by
in the paperwork, too. One of thethe card holder into an account that is
simplest (and most overlooked) ways toset up specifically for this purpose.
start building your child's credit is toThen, if the card holder doesn't make
get them to co-sign for their car loan.their payments, the card issuer can take
Once their name is on the contract, theythe money they're owed out of that
will begin to receive credit for timelyaccount. Since this significantly
car payments.reduces the risk to the issuer, banks
Your Own Cardsand credit card companies will issue
If your child is trustworthy, you cansecured cards to applicants who might
add them to your own credit cardnot qualify for non-secured cards.
accounts. Any credit history associatedWith a little pre-planning and strategic
with your credit cards will thenthinking, you can have your child's
influence your child's credit score.credit up and running in no time.
Bank CardsWhichever card you and your child decide
Start a checking or savings account forto go with, emphasize to them the
your child while they are in their earlyimportance of not carrying a balance,
to mid teens. Make sure that thelest they get mired down in fees,
accounts maintain a positive balance.penalties and interest. Your child might
Then, by the time your child is ready tothink you're nagging, but since when has
head off to college, they will alreadythat stopped a good parent from getting
have a positive history with their bank.their point across?



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