How do you help your college-bound child build credit? The Financial Coach at Capital Budget Strategies, LLC, Austin’s best financial coach, has a great idea. Get your student a credit card, with conditions.
Sit your student down and explain personal finances. They will be bombarded with credit card applications on day one. Worst part, the credit card companies hire fellow students to promote them. Do not, under any circumstances, let your student sign up for a card without talking to you.
Here is our plan: Find a credit card with no annual fees and a low credit limit, for example $2,000. Together, fill out the application using your home address. The card will be in the student’s name, but you (the parent or guardian) will keep the card at home. Together, set up an online account for the card and select auto-pay, so a monthly payment is never missed.
Finally, you (parent or guardian) use the card once a month to fill your gas tank or buy groceries. After 4 years, your student will have “built” 4 years of credit to their name and would have never missed a payment! Our Austin Money Coach did this with his niece and upon graduation, she had a credit score over 800.
Remember to make this work, you must:
(1) Have your child’s consent.
(2) Work together to build your child’s personal finance confidence.
(3) Obtain a credit card with no annual fees and a low credit limit.
(4) Set up Auto Pay.
(5) Use the card once a month for a small purchase.
(6) Sign up for paperless statements so your student can review it each month.
Once your student is a graduate with income, they can raise their credit limit.
Get other tips from Capital Budget Strategies, LLC. For only $149, we will conduct a full, one-on-one financial review of your savings, spending, income, debts, net worth, retirement funds and social security. Finally, we create a personalized monthly budget that pays your debts and allows you to live your life!
All sessions are conducted via Zoom Video Conferencing, so you can sit at home or in your office. But be ready, we will need approximately 4 hours to conduct a full review. But the session is worth it – just check out our 49 5-Star Google Reviews!
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