Helping young adults establish credit

Welcome back. In today's Dollars and Cents, if you have a teenager or a college student, you might want to help them start building good credit. Joining us now, local financial advisor, Clark Garanen. Good morning, Clark. Good morning. Happy Friday. Happy Friday. From my own personal experience with my kids, it's such a good time to start establishing good credit so that they're ready when they want to move out or graduate from college. What do you recommend? When should they start getting a credit card and what else can they do to start establishing that good credit? Well, it's never too early to start, but whether you're a college student or maybe you just got out of school and you're looking to find your first job, building credit is one of the first things to kind of help you towards financial independence and just an overall healthy financial life. But if you can get started earlier with the help of your parents, then why not? And And so what parents can do is they can add on their children as authorized users to any of their credit cards. So if you're able to find a credit card that you have good payment history on, then you can add them, which gives them the inheritance of the length of the time that you've been on the card as well as the payment history. So for them, without even having to do anything or make payments, they're able to start building that credit along the way. this is something that I've done with my two kids who are four and two, but that's ultimately them without even having to do anything extra. And then, you know, that they're not going to be running up the credit card yet because they're too little, but it is a big responsibility. I do know like in college, oftentimes they can get their own credit card too, which is nice. I've realized that you can add them to a car, maybe that they're driving, or if you, if you buy a car put their name also on that that lease you might be making the payments on the car but right some of these things are um and and maybe when they when you you can co-sign on an apartment all these things help them build up that good credit so that they can buy a car and get an apartment on their own right exactly it's and it's baby steps you know maybe the first step is adding them as an authorized user before they're even using the card then second step then maybe you work up to their own card where you're also on it. And then third step would be potentially co-signing. And there's just more responsibility as we go along the way, more responsibility for them and more responsibility for the parents too. Because ultimately, if the parent is co-signing on an apartment or a car, it's going to be your responsibility if those payments aren't made. So you also just want to make sure that they get in the habit of checking the balances, making sure that payments are done on time. And these are just great habits to build early to eventually get to the point where then they're doing it on their own and you don't have to be a co-signer. Do they also build up some good credit by having a Venmo account and some of these other buy now, pay later accounts? Yes. So the buy now, pay later can be a double-edged sword. I think it was a year and a half ago. The buy now pay later started reporting to the credit bureaus. Which can be a great thing because if you are making those on time payments. Then you want to be getting credit for those. But we just can't treat it as free money. So that's the one. That is. It's not free you don't want to spend what you don't have. And treat buy now pay later even if it's for DoorDash. Make sure that you're doing that. Just as you would with your traditional credit cards. All right great great early financial lessons and important ones to have, especially as the kids get ready to head out the door. Clark Guerinan, thank you so much for joining us. Thanks for having me, Pam.