How to help build credit for your child

Everybody wants to set up their kids for success. When it comes to credit, the good news is that there are lots of ways you can help.

One place to start is to support them in establishing a healthy relationship with credit. After all, a good credit history can come in handy for everything from getting a credit card to taking out a mortgage. Learn more about ways to help your child build credit.

What you’ll learn:

• Adding your child as an authorized user on your credit card account may be one way to help them establish and build credit. That’s as long as you both use the account responsibly.

• Capital One reports authorized users to the credit bureaus. But if your issuer doesn’t do that or the card isn’t used responsibly, being an authorized user won’t help them build credit.

• Once your child turns 21—or 18 in some cases—they may have access to more options for building credit. These options include the responsible use of secured cards and student cards. 

• The Consumer Financial Protection Bureau (CFPB) suggests checking your child’s credit reports to spot errors and signs of identity theft.

Accessing credit and using it responsibly can help set the foundation for a lifetime of financial health. Here are ways to help your child establish good credit habits.

Teaching your children about money at an early age could help prepare them when it’s time to put good financial habits into action. 

You could teach your kids about money by:

• Showing them how to save money and why it matters

• Paying them a regular allowance to demonstrate how money is earned

• Reviewing the importance of budgeting for both essential and fun expenditures

• Explaining the basics of credit

If you think your child is ready, you could add them to your credit card account as an authorized user. That way, they’ll have their own card and can learn about the responsible use of credit. Even if you don’t give them their own card, they still could build credit if you use your card responsibly. 

Just make sure your issuer reports the account activity of authorized users to credit bureaus, like Capital One does.

Even if you’re pretty sure your child has no credit history, the CFPB suggests you check. That way, you can be more confident about your child starting out with a clean credit report. The Federal Trade Commission (FTC) suggests closely checking kids’ credit reports beginning when they are 16. But you can check earlier.

You can get free copies of your child’s credit reports from each of the three major credit bureaus at AnnualCreditreport.com. And checking your child’s reports early can give you time to correct errors. 

Once your child is 18 and has established credit, they can use credit-monitoring tools such as CreditWise from Capital One. CreditWise lets them monitor their credit score and credit report. Using CreditWise won’t hurt their credit scores, and it’s free.

Opening a savings account like a Capital One Kids Savings Account could help them set savings goals and learn to make deposits. Young adults might benefit from the extra independence and experience offered by Capital One’s teen checking account.

Once your child turns 18, they’re not a minor anymore. But there are still laws about issuing them credit cards. “In most cases, you’re required to be at least 21 to get a credit card,” the CFPB says. That’s unless the applicant can prove they have sufficient income to make monthly payments or have a co-signer who’s over 21.

But many major credit card issuers don’t allow co-signers. But your child’s 18th birthday might offer an opportunity to talk seriously about what it means to have their own card in the future. That might include cards for people establishing or building credit, such as:

• Secured credit cards: Opening a secured card account requires making a refundable security deposit.

• Student credit cards: Created with college students in mind, student cards can have less stringent qualifying requirements than traditional cards.

It’s possible to start building credit early as an authorized user on a parent’s credit card account. Remember, this depends on the policies of your credit card issuer and the credit bureaus. Capital One reports the card activity of authorized users to the credit bureaus. Others may not.

But there’s no need to feel like anyone’s falling behind. The CFPB says most people don’t have a credit record before they turn 18.

Credit bureaus typically don’t generate credit reports for minors, but your child could have a credit profile if: 

• They’re an authorized user.

• They’re a victim of identity theft.

• A credit bureau confused them with someone who has a similar name.

 The CFPB has information about how to check to see if a child has a credit report—and how to dispute errors and identity theft.

As a parent, there are lots of ways to help your child establish and build credit. Adding them as an authorized user on your credit card account could be one. And once they turn 18 or 21, they’ll typically have other options like secured credit cards and student credit cards. 

A student credit card from Capital One could be a good place to start. You could also see if they’re pre-approved for a card before they apply. It’s quick and it won’t hurt their credit scores.

Whether your idea of a good time is getting out on the town, traveling the world or staying in, Capital One has a rewards card that may fit your lifestyle.

• Explore travel and miles rewards credit cards with unlimited miles you can actually use. 

• Earn unlimited 1.5% cash back on every purchase, every day, with a cash rewards credit card.

• Earn unlimited cash back whether you’re going out or staying in, with a dining and entertainment credit card.