As soon as your child reaches the age of 18, they are suddenly eligible for all sorts of financial products like credit cards, student loans and overdrafts.
They can be really useful tools. But they can also be disastrous for their credit file if they don’t know how to use them properly.
Making sure that your child is educated on how to check and build their credit score early is important. So, Loqbox is taking a look at what age you should start to check and build up your kid’s credit score, and what you can do to make sure they get the best possible start in their financial life.
How can I build my child’s credit score?
If you’ve been thinking about your child’s future and are wondering if there’s a ‘credit score for kids’…the short answer is that nobody can start to build up a credit history until they are 18 years old. So if your child is under 18, there isn’t a lot you can do to directly impact their credit score as they won’t have one.
You may have heard that adding your child to your credit card will start to improve their rating from the age of 13. But in the UK, this isn’t true.
Check with your provider to see if you can add your child as an authorised user on your credit card. It could have some benefits. But it won’t help your child to improve their credit rating.
As the owner of the credit card, even with an authorised child using it, only you would be responsible for it. So it only affects your credit score and any debts incurred would be in your name.
If your child has their own credit card, it will have an impact on their credit score. But they’ll have to wait until they turn 18 to have one.
How to check a child’s credit report?
Can you check a minor’s credit score? Well, they won’t have a credit report to check until they are 18. So no – it isn’t possible to check your child’s credit report when they are a minor simply because it doesn’t exist (yet).
However, it’s a good idea to make them familiar with credit scores in general before they turn 18, so that they have a good understanding of what impact their decisions will have on their financial future.
Financial education isn’t going to be high on your child’s priorities as they venture into the big wide world. But before long they will notice the good and bad effects that their credit score has on their life.
Getting it right early can save them thousands of pounds on credit cards, mortgages and loans when the time comes for them to apply, not to mention a whole lot of time!
If you are happy for your child to see your credit history, why not get them interested in how it works by showing them your credit score? It’s possible to see your credit score, for free and without harming it, using one of these services. So why not go through it with your child. You both might discover something!
*Just so you know, if you sign up for ClearScore using this link, we get a little commission. We wouldn’t want to hide it from you!
Tips for teaching kids about credit scores
Although it isn’t possible to check or build your child’s credit score until they are 18, there are still some things that you can do to make sure that your kid gets the best possible start with their credit history.
As always, Loqbox is here to help. Here’s our list of things you can do to start teaching your kids about credit, credit scores and money:
Get them used to handling money
Once they turn 18, one of the best ways to build their credit score would be to use a credit card. But credit cards can seem scary to an 18 year old (heck, they are scary to some older people, so who can blame them?). So it’s a good idea to teach your child how to do that responsibly before that plastic is in their hands.
They can’t have their own credit card until they are 18. But you can get them a pre-paid debit card. This offers them some financial independence while keeping them in a safe space to explore paying for things on a card before they get their hands on a real credit card (and the line of credit attached to it!).
You can then spend time together going through how bank statements work and start having healthy conversations about overdrafts, credit and high-interest debt.
Teach them what impacts their credit score
It can be tricky to understand everything that can have a positive or negative impact on your credit score. But a great place to start is this article that explains what credit scores are and how they are calculated.
You can also check out our blog, which digs into everything and anything we can think of that could improve or hurt your credit score. Student loans, car finance, credit cards. There’s a lot there. But start by checking out the things that will be most relevant to your child when they turn 18.
It’s often the case that young people have no idea what credit is until it is being offered to them. And that works much more in the favour of the lender than your child!
Loqbox can only give some guidance to help you prepare them for the world of financial decision-making — we know that you are the one with their best interests in mind, and that you understand the complexities of your child’s financial situation better than anyone else.
So no matter which way you choose to teach them about handling money, we think that the most essential knowledge for them to understand (in addition to the credit score blog we mentioned earlier) would be:
- How important it is not to spending beyond their means
- Why making timely repayments is a good thing
- How financial wellbeing can affect the body and mind too
The information in these articles should be the building blocks for them to start feeling confident about how the UK’s credit system works. And hopefully allow them to create a sensible approach to money management.
Get them registered on the electoral roll
Having a strong electoral roll history is a great way to keep your credit score looking good. Lenders use it to make sure you are who you say you are when you apply for credit.
Even if they show zero interest in politics (after all, not everyone has aspirations to be the next Prime Minister), you can still get them ready to enter the UK credit system by teaching them the link between being registered to vote and how that helps your credit score.
You can register your child on the electoral roll when they are 16 (or as young as 14 if you live in Scotland or Wales). So, it is possible to give them a few years’ head start on their address history when their first credit report is generated.
How to improve your child’s credit score
Once your child turns 18, they are suddenly faced with lots of options to borrow money. This can be a great way for them to build their future. But it can also be a dangerous time for their financial stability.
If your child has managed to get into debt, or has misused a credit card, it’s important to remember that they won’t be the first!
The second thing to reassure them about is that there’s still plenty of things they can do to get back on track. And we’re here to give a hand!
Loqbox has helped over a million people grow their credit scores by using our credit-building tools and financial guidance.
They could start to rebuild their credit score the easy way — it could be as simple as saving a pot of money with us, or building their credit history by reporting their rent payments!