Home > Credit Resource Center > Finance Headlines > Kids and Credit Scores: Credit History Building Tips

<A TARGET="_target" HREF="http://www.lowermybills.com/crc/index.jsp?i=i&sourceid=lmb-13572-29280-23328"><IMG SRC="eic_crc_TargBalTran_WomanCivilDncButt15s30k_0308_728x90.gif" BORDER=0></A>

Kids and Credit Scores: Credit History Building Tips

Posted by: Lisa Nichols | Mar 07,2008

A while ago, we reported on the Credit Bloopers blog that the new credit score calculations would no longer allow authorized credit card users to build their credit histories using someone else’s credit card. Fair Isaac removed authorized users from their credit score calculations to rid their files of credit piggybacking, but the move also affects children. Kids have historically become authorized users on their parents’ credit cards to help build their credit history. Credit piggybacking effectively ends one avenue used by parents to help their children build their credit histories.

 

Credit Piggybacking No Longer Viable Way to Build Credit History  

 

Credit piggybacking was offered by some credit counseling agencies as a way for people with poor credit to build their credit history. Essentially, people with good credit scores rented out their credit histories to others and allowed them to become authorized users on their credit cards. The two parties were connected by the credit repair agency and never met. The person with poor credit would see an artificial bump in their credit score after they signed on for the credit piggybacking program. They could then use this to their advantage by applying for other credit cards or loans. Fair Isaac, the company that sets credit scores, put the kibosh on credit piggybacking as part of their changes to credit scores and no longer includes the “borrowed” credit of authorized users in their credit score calculations.

 

Kids and Credit Scores: What Your Children Need to Know about Credit

 

Kids need to understand credit scores and the impacts that this number has on their lives. Without the authorized user crutch, it will be even more difficult for children to build their credit history. There’s not enough talk in schools or in the home about fiscal responsibility. As a result, financial debt is the number one reason why kids drop out of college. Discuss responsible credit card use, credit repair, loan repayments and bad debt with kids to help them improve their credit score. Even small children can begin to learn the basics of building a credit history when they earn credit for doing household chores.

 

Due to identity theft concerns, it’s more important than ever to talk to kids about their credit scores. A solid credit monitoring program protects kids, and helps children learn about credit and ways to build their credit history.

Sponsored Resources Ads by Google

<A TARGET="_target" HREF="http://www.lowermybills.com/crc/index.jsp?i=i&sourceid=lmb-13571-29279-23156"><IMG SRC="eic_crc_TargMenuCredTypePerkCardLink3Arrow_0308_728x90.gif" BORDER=0></A>