It is never too early to start planning for your kids future of credit. Unfortunately, too many parents neglect to consider their child’s credit standing until they are an adult. Although minors cannot carry a credit status, there are ways their credit can be impacted before they even turn 18.
Teach Money Management Skills
Most kids never learn money management skills through their parents. In fact, many kids go off to college and are expected to learn how to budget, save and stay out of debt on their own. The best thing you can do for your child is to start early. Whether they earn an allowance or get money as gifts from family members, start demonstrating key principles such as saving, budgeting, spending and keeping track of the money. Even kids as young as 5 can learn simple money management skills.
Perhaps the most important aspect of teaching kids to manage their money is how debt works. Giving your high school kid a chance to have a low limit credit card or debit card provides you with a chance to teach them how to monitor their debt balances and pay them off. Experience is crucial for kids learning money skills, especially if you want them to have a fighting chance at a good credit standing as an adult.
Protect Their Identity
Many people do not realize that identity theft is becoming an increasing problem for children. Identity thieves are now stealing the personal identification information of minors in order to use it for opening credit lines and applying for loans. Children are at a greater risk of having their information stolen and used fraudulently simply because this information is rarely monitored. Parents should monitor their child’s credit report for activity. Further, parents can put a credit freeze on their credit, which will prevent their information from being used fraudulently and send notifications of any threats to their information.