How to build your kids' credit during COVID-19 pandemic

Credit expert offers advice to young borrowers
Posted at 12:07 PM, Jul 08, 2020
and last updated 2020-07-09 18:58:09-04

LAS VEGAS (KTNV) — Right now, a lot of recent high school graduates are facing the tough decision of whether it's worth it to take on tens of thousands of dollars in debt to attend college during a pandemic.

The irony of building credit is that you have to take on debt to do it, and no one wants to take on additional debt, especially right now during a pandemic. 13 Action News spoke with a credit expert who says there are some simple money moves you can make right now to set up your kids for future financial success.

As a kid, building credit isn't priority number one, but it could open or close a lot of doors down the road.

"Good credit can make things easier for you in the future, whether it’s securing loans, credit cards with better terms and rates. It might even help your ability to land a job or a desirable apartment," said Nathan Grant, a senior credit industry analyst at ''

Grant says although you can't even open your own bank account until you're 18, you can start teaching your kids about credit long before that, perhaps with a prepaid card.

"Many of those allow for monthly direct deposits. So, you could have their allowance loaded directly on their card and that could, at an early age, give them a way to understand budgeting and using a card that has a limit on it to teach them better spending habits," said Grant.

Then, as your children approach adulthood, maybe you make them an authorized user on your credit card. Even if you're not ready to let them make purchases and payments on your card, Grant says just making them an authorized user will help them build credit.

"Many credit card issuers offer this and most issuers report the account’s activity in the authorized user's name, whether or not they are actually using the account. So, you can add them as a user and not give them access. It will hopefully build their credit up right out of the gate," said Grant.

When your child is ready for their own card, you shouldn't just pick the shiniest piece of plastic. Grant says a secured credit card could be a safer option for someone with little or no credit.

"It uses a refundable security deposit that you fund yourself to fund the account's credit limit, upon approval. So, there’s less risk on the issuer’s part. So, for somebody who is new to credit or doesn’t have any credit history, that could get your foot in the door," said Grant.

And if you're considering paying for college with credit, that's a decision Grant can't make for you. But, if you decide to take a gap year, he says the goal should be to pay off any existing debts and save for the future. And if you do go to college, he shared some general advice.

"The best rule of thumb, on top of just general responsible use, is just try not to use your credit card for purchases you know you won’t be able to pay off before that monthly due date. Not spending beyond your means, that’s going to be more valuable in your college years than ever," said Grant.

For more ways to boost your credit score, click this link from ''