BACK

Credit Smart

Can I co-sign on secured card to start child’s credit?

Summary

It may be wiser, and easier, to add her as an authorized user to an existing card

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question

Dear Opening Credits,
My daughter is 16 and I’d like to set her up with a secured card so she can build credit. Please recommend the one that would be best that would get her credit history started. I have a score of 850-plus and will co-sign and secure with $200.  – Michele

Answer

Dear Michele,
Pretty much any credit card that bears your daughter’s name will help build her credit history. It could be unsecured or secured, and you could co-sign on the account or let her be an authorized user on a card you have. As you probably know, she can’t sign for one by herself because she’s still a minor.

I think you’re on the right track with the secured card idea. These products are perfect for people who haven’t yet had a credit card because all an applicant needs is to offer a cash deposit that will guarantee the credit line, plus enough income to pay for the monthly bills. You have a fantastic credit rating, and although it’s not required for a secured card, it certainly doesn’t hurt.

However, not all credit issuers allow co-signers now. Today, most card issuers require just one person on the contract as an owner, but there are a few holdouts, including Wells Fargo and Bank of America, but those are for unsecured cards. I am not aware of any secured cards that allow co-signers.

If you do know of a secured credit card and are able to add your daughter’s name as a co-signer, fantastic. You would both be on the account and it would start to show up on each of your credit reports. The issuer will report the amount of the credit line, and after either of you begin to charge and repay, the details of your account activity – such as your payment pattern and any unpaid balance that is carried over – would be reported and regularly updated.

As you likely know, the path to a high credit rating is straightforward: Use the card, pay on time, and maintain low or no debt. Simple. After six months of doing so, your daughter’s credit history will be established. Her credit scores, which are based on the information on a credit report, would escalate as the months pass, and it won’t be long before she has a good credit rating.

A better alternative I’d like you to consider is making your daughter an authorized user on a credit card. You can open a new account – secured if you wish – and add her from the beginning, or you can probably also add her to a card you already have. Then the history of the account she’s associated with will appear on her credit reports and be factored into her credit scores. It’s an easy process.

But back to you and your amazing credit score. I want you to protect it. The advantage of an authorized user arrangement is that you would maintain all control over the account. She’d have a card with which to charge and create a credit history, but if she misuses it you could swoop in and remove her from the account. You can’t just kick a co-signer off, so an authorized user arrangement carries less risk for you.

I also urge you to give your daughter lessons in sound credit management before you hand her a card. You seem to be the master, so go for it! Explain how to charge effectively, covering the importance of on-time payments and only spending what she can afford to pay off in full. The sooner she makes that a habit, the better.

See related:Poll: 4 in 10 co-signers lose money, Which cards allow you to be a co-signer, authorized user?

What’s up next?

In Credit Smart

Back-to-school credit guide 2017

CreditCards.com resources for shopping, learning about credit and managing debt during the back-to-school season.

Published: July 14, 2017

See more stories
Credit Card Rate Report Updated: July 17th, 2019
Business
15.61%
Airline
17.59%
Cash Back
17.68%
Reward
17.58%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.