Can Adding Children to Your Credit Card Boost Their Future Credit Scores?

A Reddit user is trying to help his teenage children start earning a good credit score so they get started on the right financial path.  The poster wanted to know if adding his kids to his account as authorized users is a good way to accomplish that goal and give their score a boost. 

So, does this technique work to help increase credit? Here’s what you need to know. 

Can you help your kids’ credit by adding them as authorized users?

When you add your children as authorized users on your credit card accounts, they do not have to undergo a credit check. They also don’t become responsible for making payments on your card. They do have the authority to use your card, though, and the card will also be listed on their credit history.  Most card companies allow you to add authorized users even if they are under 18, although some cards with special perks, such as airline lounge access, may limit the number of authorized users you can have. 

Adding your kids as authorized users can have huge benefits as long as you trust that your kids won’t go crazy with your card. In fact, you don’t even have to actually give them a physical card or the card number in order for them to be authorized users, even though they will have a card in their name once you call your card company and add them.

As soon as they have been added as authorized users to the account, the account shows up on their credit history. Several other posters who replied to the Redditor’s thread said that their parents or older relatives had done this for them, or that they had done this for younger children in their lives, and it had a major positive effect, so the OP should be able to accomplish her goals by adding her kids. 

Why does becoming an authorized user help your kids’ credit scores?

Becoming an authorized user can help your children improve their credit scores because the account history shows up on their credit record. Credit scores are based on:

• Your payment history, which is the largest factor that determines your score
• Your credit used versus credit available, with the less available credit you use, the higher your score. 
• The average age of your credit history, with a longer average age earning higher scores
• The mix of credit you have, with a broader mix leading to a better score
• The number of inquiries on your records, as too many requests for new credit result in a lower score due to lender concerns that you may be borrowing more than you can handle

If you have an account that has been open for a long time with a long positive payment history, a good amount of available credit, and a low balance, your kids will have that account on their record once they are authorized users. This means their own credit history will look longer than it is, and they’ll have a good payment history and credit utilization ratio. 

Ultimately, your kids will eventually need to build their own credit, as they will only benefit from being an authorized user as long as you allow that account to remain on their record. Still, adding them in the first place will go a long way in helping them to get started with the credit-building process. They may qualify to take on debt they otherwise wouldn’t, so they can get credit established in their own name — and earn their own great score as long as they are responsible. 

You can also talk with a financial advisor about other ways to help your kids earn the type of great credit score that will open doors for them in the future, so they can have a leg up as they move into the financial world and begin making their own money management choices. 

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