Building a credit score

What is the quickest easiest way to start building a credit history and to start to get a good score? My daughter is going to be 19 in a few months and has nothing.

I should add to try and build a history she applied for a low limit credit card at the store she works for and was denied due to a lack of credit score.

Add her as an authorized user for one of your credit cards.

Or get her to purchase a $50K brand new truck from a “We loan money to anyone!” car dealership :slight_smile:

Does authorized user really have an effect on credit scores? I piggybacked on my ex-gfs Lowe’s card and we made some big purchases and it never seemed to even show up on my reports.

Tell her to join and get advice from it (it is free). Building up a decent credit score isn’t hard. It just takes a bit of strategy and some time. Most people don’t understand how they work. The key is to get multiple accounts and always pay them off on time. The amounts don’t matter. My credit score is 825 out of 850 so I can qualify for anything credit related but I don’t charge much at all on my many accounts.

Co-sign credit for her to get her started. For example, if you wanted to buy her a car, you could instead co-sign a loan for her as the borrower. Similarly, you could add her as an authorized user on a credit card with a manageable limit. If you are going to co-sign a loan or let her use your credit card, be sure that you are prepared to make all the payments on the loan. If no one makes timely payments on the loan, she will develop a credit history but it will be a poor one and your credit score will be dragged down too.

If she is a student, she could also take out student loans. These don’t usually require a co-signer. If she doesn’t really need to borrow the money, take out a very small student loan and set her up on automatic repayments to repay it over five to ten years. After that time, if she has at least gotten a credit card or two in the interim, she’ll have a decent credit score and a long history of timely payment.

Be sure to teach her how to use credit responsibly. Pay loans back on time and generally pay more than the minimum payment. Ideally, high interest credit card debt should be paid off in full each month. Don’t borrow more than you can handle. Don’t borrow unnecessarily.

She will probably have to get a credit card with a low limit, and a high interest rate-- but if she pays it off every month, the interest rate won’t matter. My first credit card was one that was available to students with a GPA over 2.5, and had an initial limit of $300, but it increased to $600 after six months if you never missed a payment (and this was back in 1987). The initial interest rate was something like 15.99%. I think starter cards may be as high as 24.99% now, but again, it doesn’t matter if you always pay them off. Put them on automatic payment, if you have to.

I don’t know if your daughter is a college student or not, but I think that credit card companies still like giving low spending/high interest cards to students.

Once the card is in hand, use it every pay cycle (ie, every month), but don’t charge a lot. Try to keep the amount charged to under $100 to make sure she can pay the whole thing off every month.

I don’t know if it would help her credit to make a large purchase one time, and then pay the whole thing off, or not. You might call one of the creditors who turned her down, and ask. If it would, you could help her with that, if you are really interested in helping her with her credit. Maybe there will even be something you need that she could charge, and that you could then pay off for her ASAP.

She if it’s a rewards card, check to see if some thing, like restaurants, or gas, gives double points, and use the card for that, and then nothing else.

Get on a free site, like Credit Karma, or maybe her bank, if it offers free credit monitoring, and show her how to check her credit at least once a month.

After she has made six months of payments on her card, and has no “dings,” she should have a reasonable credit score. It probably won’t be 850, because you need a long credit history for that, but it may be something like 700, or 650. Creditors will see that the reason it is what it is, is that her history is new, and that what there is of it is solid. Then she will probably be able to get other credit.

Once she has had her credit card for a year, if she has made every payment, she should contact the company, and see if she qualifies for a lower interest rate. If they turn her down, she should apply for a second card, and see if she can get an second card with a lower rate, so she has a card with a lower rate, in case she actually needs a card where she carries a balance for a while in an emergency. But don’t cancel the first card, because she doesn’t want to lose her history.

History is really important. After I paid off a mortgage, my 15-year credit history shortened to my oldest credit card (about 9 years), and my credit score dropped by about 75 points. If I’d known that was going to happen, I might not have chosen to pay off the mortgage in a lump sum, in spite of the fact that I saved quite a bit of money doing it.

I just went through a year where I paid for everything with my debit card. I didn’t use a credit card once. And my credit score was dropping a few points a month. Now I have credit cards set up to pay several bills automatically, and then my checking account automatically pays the credit cards. All I see is the emails that inform me it’s happening. But it’s been pushing my credit score back up.

Good luck to your daughter.

I am not a credit guru, but I don’t think that is the way to go. It’s YOUR credit card, not hers, so all activity will be credited to your account. And unless you plan on paying her charges, you will have to separate them and make sure this account doesn’t miss a payment while you are waiting for her to cough up her portion.

Instead, have her sign up for a new card* in her name*, and co-sign. If your credit is top-notch, there will be no problem. As long as this card is used, kept up to date, with payments on time, she will be building credit.

I made a family member an authorized user on one of my cards and it definitely showed up in her credit report.

The bill was still one bill, with all the charges from both our cards on it.

If that’s true, then it can go both ways. Black marks will show on both. You can’t have the good without the bad, which is why I don’t advise this method of handling credit.

Stuff I’ve seen:

  1. Scion has a lease program for young 'uns with no credit. They have some decent intro-level cars so it’s a win/win. After 6 months my daughter was able to buy out her lease and just finance the car (because she put loads of miles on it).
  2. State Farm Bank has a credit card program. Policy holders with no credit are automatically approved.
    I’m sure there are underwriting exceptions to both scenarios, but as I understand it if you have a job you’re good to go.

As far as the co-owned account goes, you could always open the account in both names and keep possession of the card–using it and paying it as you would one of your own.

Getting a credit card with no annual fees and paying it off in full every month is the best financial decision. After all, it is a no-interest short-term loan. But it is not necessarily the best thing for your credit score.

Carrying a balance on your credit card is a silly way to manage money, but as long as you always make the payments it makes people want to lend you more money. That is what a credit score reflects - are you someone who manages debt well enough to pay the debt back, with interest.

Never borrow money to buy a depreciating asset. A credit card balance is money borrowed to buy deprecating assets, unless you can put your house on your credit card.

Tell your daughter to get a no annual fee credit card, charge everything she can on it AS LONG AS IT IS ON HER BUDGET ALREADY, and pay off the balance every month without any exception, no matter what. Start building up an emergency fund of three months’ living expenses. Once you have an emergency fund, start investing.

She is going to get a million credit card offers. Destroy them all un-opened. Take care of your money. Your credit score can take care of itself.


Have her sign up for a secured credit card, but use that card to pay for your fixed, recurring household bills and pay with your own bank account (Netflix, cable, SDMB subscription :)). Make sure those bills don’t go over the credit limit in the month. With a secured credit card you have to put up the money for whatever the credit limit is, but you get that back later. Discover has a pretty good secured card.

A few cards allow co-signers. Co-signer is not the same as authorized user. Co-signer helps her score more than being an authorized user. Bank of America has a card that you can co-sign with her. The card shows up on both of your credit reports.

It takes a while, but eventually her credit score will start to get established and she can apply for things on her own. But be careful! It’s easy to build up a credit score that will allow her to get into some major trouble with access to very high credit limits.

Whatever cards she opens now, tell her to keep them around forever as long as they don’t have fees. One component to your credit score is how old your oldest credit card is. So if she can keep the accounts on her report, her score will be better later on.

My question is this point. My wife and I have cards in each of our names that are at least 30 years old. I have several more in the 25+ range. How many cards of this age are enough to gain the oldest card rating?

If she’s in school, there should be credit cards offered to students at the local banks. There’s usually a branch on campus for the larger schools. If not, pick one of the branches near campus.

Discover and CapitalOne both offer student credit cards. I’m sure the other banks do as well. The limits won’t be very high, but it’s an avenue worth exploring.

If she’s working, she may also be able to get a card with her bank. They may require auto-deposit of her paycheck, or require that the card be secured (by a certain amount in her savings account for example).

You absolutely can help her with her credit by making her an authorized user on your card (most easily done with a new card that you never use and she pays 100% of the bill). Here’s an article with lots of links to more sources interspersed.

I did this for two family members and it helped them a lot. I of course kept tabs on the bill to make sure my credit wasn’t harmed.

You can co-sign on a car for her if she’s interested in a car loan. My brother and I both did this with my dad - we benefited from his better credit score and we also paid diligently because we were more afraid of dad than the bank.

And getting whatever credit card she can and paying it off every month is the best way for her to do it by herself. That’s what I’ve been doing since I was 19. But I think credit cards aren’t as easy to come by now as they were in 1998.

Does she have a bank account already? If she has a checking account, that bank will probably offer her a credit card. If not, she could get a secured card. Prompt payment every month. should be stressed. If she can’t remember to do that, you should send her a reminder.


I’ve heard they look at the longest account you’ve had open. I’m not sure if it makes a difference if you have a lot of old accounts or just one. Perhaps someone else might have more info.

According to Credit Karma, the AVERAGE credit card age is a factor. So if I had to go back and start over I’d get two or three secured or low annual fee cards, stash them and not use them. They won’t get cancelled for non-use because of the balance on them or the annual fee. It won’t help much in the short term other than pushing down the utilization percentage, but in the long run it will keep opening a new card picked for rewards from dragging down the average enough to affect the score.

The average age of accounts is a factor but not as significant as most people think it is. I have experimented with my own credit scores for multiple decades and I was worried when my first credit card that I had since college got cancelled due to non-use and the average age of my credit cards went down to less than two years because I open new cards all the time to get travel rewards. I still had a credit score over 800 and could qualify for anything.

The most important thing is to charge almost anything, even if it is $5, and pay it off and have multiple accounts. Over 20 is ideal but she won’t be able to do that right away. The dollar amounts don’t matter. Again, can guide you on how to optimize the score over time. I get lots of benefits like free travel every year from having a really high credit score and it doesn’t cost me anything.