While you’re in the thick of parenthood, trying to make sure that your children eat the right foods, read the right books, participate in the right activities, and get on the right track for success in life, ScoreSense would like to gently remind you that you may not be doing enough. Well, we’re teasing you, of course, because we know that parents often feel overwhelmed by the choices they have to make, and things they have to keep up with, but there is one area in which you actually might not be making the right kind of progress. Credit is one of the most important gifts you can give a child, so why not start building that credit rating early?
Of course, you’re not going to give a young child a credit card. However, from earliest childhood you should try to teach children the basics of financial wisdom, by giving them an allowance and requiring them to budget it wisely, and by getting them started on saving and charitable giving. While it won’t necessarily help build their credit score, a sense of the responsibility that goes along with money is a good value to instill early.
If you’ve laid the groundwork for good financial sensibilities, you’ll probably be confident that your child can handle a credit card once he or she leaves for college. However, the best way to introduce kids to credit cards is to put them on one of yours. Making your teen an authorized cardholder on one of your credit card accounts gives you the opportunity to supervise their use of the card, so that when they get their own card, they’re aware of the importance of following some guidelines.
- Have a credit card, not just a debit card. The credit bureaus don’t track debit card activity, so it’s important to have a line of credit, in order to build your credit history.
- Use your credit card wisely. A credit card offers you the opportunity to build—or ruin—your credit score. If possible, pay the card in full each month. If that isn’t possible, make payments on time.
- Get a different type of credit, too, when you are able. While you don’t want to run up debt, having diversity in your accounts is important. An auto loan or personal loan is a good idea, but even a department store credit card can be helpful.
- Pay all bills on time. This is the fastest way to build a good credit score. Conversely, late payments can wreck your credit at an alarming speed. This cannot be stressed enough—timeliness of payments has a huge impact on your credit history, which constitutes 35 percent of your credit score.
- When you pay off a credit card, do not close the account. This may seem counterintuitive, but if you close out an account with a zero balance, you instantly lower your amount of available credit, and skew your debt-to-credit ratio in the wrong direction.
- Monitor your credit score. Everyone’s entitled to one credit score report, from each of the three bureaus, each year. If you use a monitoring service like ScoreSense, credit report retrieval is easy, and as a bonus, ScoreSense will monitor your accounts, track your credit score from month to month, and alert you to any irregularities. This means that with ScoreSense, scam artists are much less likely to be able to damage your credit score.
One of the easiest ways to monitor your credit, ScoreSense offers you the peace of mind that comes with taking charge of your financial health. By monitoring your credit and sending you valuable information, ScoreSense makes it easy to protect your finances and your family. For more information, or if any of these tips were helpful to you, visit the ScoreSense website at http://www.scoresense.com or follow us on Facebook, Twitter, and YouTube.