Does Adding Your Child to a Credit Card Help His Credit Score?

Establishing credit can be challenging when creditors are unwilling to extend it. Young adults are often faced with the struggle of obtaining credit when they have no credit history. In some cases, parents add children to their accounts as authorized users to help boost the child's score.

Piggybacking

When people realized that an added user could inherit a cardholder's good credit, many consumers began taking advantage of the system. The practice earned the nickname "piggybacking." In 2008, FICO began cracking down on those trying to deceive credit bureaus by piggybacking. Fortunately, true authorized users are still able to reap the credit benefits of being added to a parent's credit card account. Scoring models will check spending habits and account history to determine the legitimate accounts.

Co-Sign

Parents who wish to help build credit for their child can co-sign on the child's credit card application. When a parent co-signs, she is promising to cover the payments if the cardholder defaults. Any delinquencies will also show up on the parents' credit reports.

Tips

Young adults with no credit or limited credit history may want to consider alternative ways of increasing their credit score. For example, a secured credit card can be opened by almost anyone, regardless of their credit history. As long as the credit card company reports to the bureaus, a secured credit card can help a child establish their credit. It is also important to establish checking and savings accounts. Lenders often look for both accounts before offering credit.