Why I will add my daughter as an authorized user on my credit card

Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to manage money better.

Here’s what: Adding a friend or family member to your credit card can help them build good credit

At the age of 20, I thought I was the epitome of financial responsibility. I had never had a credit card before; I had never applied for a loan before; everything i bought was with cash.

Then I discovered the world of travel rewards credit cards and learned how the points they accumulate would allow me to travel whenever I wanted, (almost) for free. My attitude towards credit cards quickly changed from skepticism to feverish lust.

I walked into the bank confidently and knew exactly what I wanted: the Chase Sapphire Preferred Card. I thought the sales specialists would be so impressed with my cash-only past that they would submissively stick any card I wanted in my lap.

What happened was the opposite. Since I had never applied for credit, I had no credit score. I was essentially “off-the-grid”, and lenders aren’t willing to trust you with their…


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if you have no history of responsible behavior with credit. I was verbally escorted out of the building, now desperate to receive each kind of credit card – so I could build a good credit score and eventually open better ones.

Whether you’re young, new to the US, or just haven’t used credit often enough to generate a good credit score, building good credit can take time and effort. But there is one thing you can do to improve your credit score by proxy: become an authorized user on someone else’s credit card. In most cases, you will benefit from the primary cardholder’s account information, as it appears on your personal credit report (think payment history, credit usage, etc.).

An important note: when you add an authorized user to your credit card, you are the one responsible for the payment. Only add people you implicitly trust. Likewise, you don’t want to associate yourself as an authorized user with a primary cardholder with a bad credit history. The business of authorized users revolves around trust.

This is a great strategy for parents who want to give their kids a head start on their credit score – one of the most important numbers of their lives. It unlocks mortgages, car loans, and even (almost) free travel thanks to rewards credit cards. And understand this: Several banks, including Chase, Capital One, and Citi, do not have an age limit for authorized users. That means you can add kids even as toddlers and let their credit histories bake for 18 years until they’re officially eligible to open a card of their own.

My wife and I are expecting a daughter in May and I plan to make her an authorized user before she turns one year old. I may end up using this tool as an opportunity to teach her about money as well. As long as I remain financially responsible, she will enter the world of maturity with Willy Wonka’s golden ticket – a great credit score and the resulting favor in the eyes of lenders.

— Joseph Hostetler, credit card reporter for Personal Finance Insider


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