Except that most of the credit cards then had annual fees, and the ones that did not were hard to get approved for, except Discover, which was less accepted then.
Actually back in the 1970s, theyâd GIVE you incentives to sign up for credit cards and I only got cards with no annual fee. They gave things like tshirts or similar, like they offer at Costco for signing up for the visa ccard. I hardly made any money and paid the card off every month. I was amazed at the number of charges I was NEVER billed for, ever. The merchants must not have had good bookkeeping systems.
I added my kids each to a ccard and Sâs credit history may be older than he is. Same with D. Sheâs never gad a fulltime job but never been turned down for a ccard.
As an aftermath of the 2008 financial crisis, anyone under 21 has to show an independent source of income to be able to repay the credit card. Marketing activity was also highly regulated on college campuses. Because of this, many issuers do lend in this space.
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Discover will raise her credit limit, if thatâs your concern, if she calls after a year or so and asks, assuming that she pays it off in full every month before interest accrues. That will bring her credit utilization ratio down, assuming that she keeps her spending and debt consistent with before the credit limit increase. Almost 800 will be high enough to rent an apartment. Most adult tenants have lower credit than this.
I canât speak from experience based on any effort to be approved for credit post-2017, so individual experiences may vary. What I wrote is just basically true- that credit utilization is a significant factor in FICO and credit score calculations, and utilization of below about 5% is best for pursuing an above-800 credit score. I review peopleâs credit reports for work routinely, so that is the side from which I can offer advice re: credit scores.
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Thanks. No, we arenât concerned about the credit limit at this time. She rarely has a balance over $150 and when she made a larger purchase on that card she paid it down mid cycle rather than waiting for the statement. She has one more year on campus then will have an apartment senior year⊠so based on another suggestion upthread Iâll suggest she have the utilities in her name (or at least some of them if the roommates have the same idea).
Low credit utilization is a double edged sword when financial institutions access incremental credit worthiness. On one hand it does suggest that you are currently managing your finances well but it is a static matrix.
A lesson learned from recent financial shocks has been that consumers experiencing financial strain tend to max out whatever available credit they have prior to going into arrears and ultimately default. Consumers who suspect they one day might be in trouble often seek incremental limits in advance to serve as what amounts to a ârainy dayâ source of money.
Consequently, banks (particularly mortgage lenders) now look beyond the credit score in isolation and review very closely total available credit and assess credit worthiness assuming it is fully drawn upon prior to making loans. This dynamic approach has been broadly adopted.
In other words when excrement hits air circulator how far under water would the applicant be in real terms as we stand in line with other creditors.
The best way to build a credit profile is a reasonable (as small as possible with modest head room) consumer credit profile paid off in full and on time along with timely payment of utilities and other monthly recurring expenses.
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What my daughter also did, was set up a free account with each of 3 major credit reporting agencies in a matter of 30 minutes (be sure you keep opting out of the for-fee âadd-onâ features.)
Then she immediately locked down access to her credit score on each (all of them are required by law to offer the lock/unlock for free, but some of them make the free option a little trickier to find on their site).
Some of the sites do a great job in educating you about your personal credit rating factors (in many details), break down what changes from month to month, what to avoid, what steps can be taken to improve, etc.
The effort was triggered after she received a checkbook for a checking account she had never opened - which can be prevented by putting an all-important security freeze at a different agency that is used specifically by banks and NOT on everyoneâs radar: https://www.chexsystems.com/security-freeze/information
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If youâre into Apple, you could get an Apple card, by Goldman Sachs. They allow you to setup adult kids with card under your name with a specified credit limit. It would allow them to build credit as they pay it off monthly.
Just to be clear, you are not locking your credit score. You are putting a freeze on your bureau that requires a lender to contact you at a specific number before opening a new or increasing a line of credit.
In addition there is another credit reporting agency, Innovis. Add or Manage a Security Freeze | Innovis
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Updated my post to clarify that not the score itself is being locked (the numeric value will continue to respond ongoing transactions), but rather (most) âaccessâ to the credit report.
Actually, the lender will not just need to contact you, but instead will ask you to contact the credit bureau (e.g., on their web site) to affect a same-day âtemporary thawâ, before the credit application can even commence (Iâve since done this on numerous occasions for loans, mortgages, even landlords/management companies).
What people donât realize is that banks may not be affected by it when you open a checking account (including a debit card!) - because technically you will be the one depositing funds with them, which doesnât require a/good credit history.
Instead, banks will use ChexSystems to learn if someone has a history of cheque/banking-related issues, and a security block with ChexSystems prevents opening of bank accounts (at least at participating banks) in your name.
Mine did. And then paid it off the same day. They both got very high limit (20k plus) cc as soon as they had their own income after graduation. Of course like we taught them they pay in full every month.
Just wanted to give a shout out to all the people who posted here â so helpful!!
I didnât realize how we could help D22 build up her credit in college before I read this thread. Especially with a kid who is very responsible about using credit.
We ended up adding her as an authorized user on my spouseâs long-standing account before her first year. She used it to buy books and a few other things throughout the year.
Then, this summer, after she had collected a few monthsâ worth of paychecks, she applied for a Capital One Savor card. She was approved for one with a $500 limit and 3% back on certain entertainment/dining, 1% on other expenses. By spending $100 the first month, she received a $50 reward, so she paid for a $100 tab for dinner out with friends. They each Venmoed her back their share and she ended up making money on it! 
She also has an excellent credit score that reflects over 20 years of credit history thanks to her dadâs card.
Anyway, this is something I hadnât given a lot of thought to before I saw this here, so I thought I would bump it up for other parents and express my appreciation!
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Nice to hear the update.
It is helpful (though I think perhaps not totally fair) that our kids can get benefit from parentsâ good payment history. Looking back, Iâm really glad that I was diligent paying off the Jetblue credit card where we added the kids. My focus was always on our main Visa bill, so there was a good chance I might have been late paying the alternate card.
I think good financial habits can be instilled in our kids and the places offering cards are happy to have people who will use the cards and not run up huge bills that they wonât pay off.
I agree itâs unfair to responsible young folks who didnât have an older relative who was willing to add them and lend them a longer credit history.
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Ugh, well, when I made this thread, for some reason I assumed my 22 year old had her own card (she has had a debit forever and is an authorized user on ours). I learned through a conversation that she never applied for one and thought being an authorized user was enough. Sheâs in graduate school taking loans in her own name so Iâm guessing a good credit score helps. Sheâs going yo apply for one (she is working as a bartender in Boston at least 3 nights a week so at least has some income).
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