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Q. My grandson will be starting college next year. I see on my own credit report that length of time with a line of credit is a factor in the score. What do you suggest he should do to start his credit history? I suggested we get a credit card together, but would he also benefit from the story?
A. It is wonderful that you are trying to help your grandson.
And you’re right. Time is one of many factors in calculating one’s credit score.
The only way to “start” someone’s credit history is to get a loan or other debt account, like a credit card, said Ken Van Leeuwen, certified financial planner at Van Leeuwen & Company at Princeton.
He said a credit card is usually the easiest and easiest way for a person to start building their credit.
Of course, how the credit card is used, including maintaining a low balance and timely payment, are important factors in helping a cardholder establish a positive payment history and thus establish his credit rating, he said.
If you opened a credit card together, you would both benefit assuming you kept a low balance and made payments on time, he said.
However, the opposite is also true.
“If the card runs out often or if payments are missed or not made on time, it will negatively affect both of your credit scores,” he said.
An alternative to a joint credit card would be to co-sign a credit card in your grandson’s name only, Van Leeuwen said.
“Instead of being the cardholder on the account like you would be with a joint credit card, you’re essentially vouching for your grandson as the sole owner of the account and you’re responsible for the payments on the card. if your grandson couldn’t,” he said. .
Another option would be to add your grandson as an authorized user to one of your credit card accounts. It would benefit from how long you’ve had the card as well as your payment history, assuming it’s good.
Whatever you decide, make sure you both understand the responsibilities and potential risks.
Send your questions to [email protected].
Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.