How to Build Credit With Help From Mom or Dad?

Two great ways that mom and/or dad can help you with your financial start is by making you an authorized user on a credit card they have or by co-signing a loan together. Other family members or close friends could also do this for you.

By making you an authorized user, your parents get you a credit card with your name on it. They can benefit by helping you this way if it is a rewards credit card. You will receive credit history credit for the timely payments they make on the card account. Your parents will earn either cash back or points for every dollar in purchases you make. 

There are two things your parents will need to consider. There could be yearly fees for having authorized users. The other is that they are responsible for repaying any charges that you make even if you do not pay for them. 

If your spending significantly increases their debt load (credit card utilization), then both of your credit scores will be harmed. 

The second way your parents can help is by co-signing on a car loan, student loan, or for a credit card. If your parents have good credit, this will significantly improve your chances of successfully qualifying. With a co-signed loan, you are both responsible for repaying the credit or loan. 

If you are under 21 years of age, the Credit Card Accountability Responsibility and Disclosure Act from 2009 (CARD) mandates that you must have a co-signer who is an adult, unless you can demonstrate enough independent income of your own to pay back credit card charges and balances. 

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