About a year ago, I asked my 6-year old son if he is ever getting married and he answered me with, “That’s disgusting.”
The topic came up again the other day and when I asked him the same question, he shyly replied, “You never know.”
The truth is, we don’t know what’s in store for our kids’ futures, but we can take steps now to make sure they are in a strong financial position as they get older.
This financial position could very well affect their relationships later in life; especially when it comes to credit scores.
Google the words “marriage” and “credit” and a slew of articles and advice columns appear discussing the connection between the two.
This idea came to mind while I was doing research on credit and came across several postings on this very topic.
In fact, on the financial site Investopedia.com, one can find the frequently asked question of, “Does marrying someone with bad credit affect my credit score?”
Don’t get me wrong; I’m not trying to marry off our little ones just yet.
But, there’s no harm in helping them tidy up their finances before possibly tying the knot one day.
Credit is a good place to start.
Here are three tips for teaching kids about credit.
1. Get secure. I recently received an email from a reader concerned that her 21-year old son was unable to get a credit card because he did not have prior credit. One suggestion I made was to get a secured credit card. Many people opt for this type of card if they are trying to establish credit or rebuild credit following financial trouble. A secured card allows the person to make a deposit to the card company equal to a line of credit. The card company is protected and the card holder is able to build credit. Everyone is happy. Show you are responsible with a secured card and you will soon be able to graduate to an unsecured card.
2. The credit bureaus are your friends. If you choose to get a secured card, make sure that card reports to one of the three major credit bureaus – Equifax, TransUnion and Experian. Think of these companies as the big brother of credit. They are watching your every move while collecting details about your spending habits and ability to pay your balances on time. It’s these very details which help individuals begin to develop a credit history. In other words, build credit and get a credit score.
3. It’s a balancing act. As a card holder you want to show that you are disciplined and able to pay what you owe back on time. Greg McBride, senior financial analyst at Bankrate.com, advises card holders not to fall for the misperception that one must carry a balance to establish credit. It’s better for one’s bottom line to pay it in full whenever possible.
Email me at email@example.com with your questions and comments.