Master Your Money - Page 6 of 6

Master Your Money

its numbers. Now, authorized user accounts won’t count toward your credit score.

But good credit scores are crucial to securing the best interest rates on mortgages, car loans, and other products, so children will have to build a payment history– just in other ways. That’s why Lott Rolfe says he is going to educate his children about the benefits and dangers of establishing credit lines. When they’re teenagers, they’ll have to get their own cards, now that piggybacking has been e
liminated, but Rolfe plans to stay on top of them every step of the way. “I don’t want them to get caught up in the credit trap,” he says.

One savvy solution from credit adviser Gerri Detweiler: Get your son or daughter a secured credit card, which is essentially a credit line backed up by collateral in another account. For example, deposit $1,000 in the bank, and that’s the amount available to be charged on the secured card. Such products allow a young person to establish a credit history while preventing them from going on a spending spree.