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HomeBlog Blog2 Ways Your Credit Score Is Compromised By Your Kid
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2 Ways Your Credit Score Is Compromised By Your Kid

December 3, 2014 by National Debt Relief

poor credit scoreNot everyone makes the connection between their credit score and their kids. And when it comes to your credit, what you don’t know about your credit score can really hurt you. This is why you may want to pay attention to what this article will try to tell you.

Some people may be surprised to know how much their kids can do to harm their credit report. Of course, they can only do that with your consent but sometimes, we fail to realize how much of our credit history they can actually influence.

This is the reason why you need to view parenthood as a financial decision too. While you need to be physically and emotionally ready to have kids, you also have to consider your finances as well. Not only will you experience a bigger expense list, you will also be responsible for the financial well being of the child. You need to instill in them the right values and behavior so they can take care of their finances well.

Your kids will really start out not knowing how to take care of credit in general. If you are not careful with that, you may not only jeopardize their future, but also your very own credit report.

According to StatisticBrain.com, the national average credit score in the country is not too great to begin with. Based on the FICO score, the average is at 691, from a range of 300 to 850. Based on VantageScore, the average is at 749, from a range of 501 to 990. While the average is not really bad, it is not great either. And if you want to maximize your future financial opportunities, it is best for you to be on your guard when it comes to your credit report.

2 ways your children can ruin your credit history

So you may be thinking, how can your kids affect your credit history? How can they destroy your score if you are the one making financial decisions at home?

You would probably think that it is all on how your kids influence what you need to buy. Any good parent would want to provide their child with the best things that money can buy. In fact, there is a survey that revealed how some parents are willing to be in debt just so they can buy their kids new items this Holiday. The debt here is none other than credit card debt. While the intention may be good because gifts will make our kids happy, the means is could be better. For some parents, they experience a lot of financial difficulties because they failed to learn how to say no to their child.

It is true that this particular scenario could ruin your credit score but it is not one of the two ways that your kids can really trash your score. There is actually something much worse than that.

Cosigning loans

First is co-signing loans. Here is the background about these type of loans. You as the older one is sure to have a great credit history behind you. Since you have used your credit cards in the past or taken other loans and paid it off responsibly, your score would reflect that you can be trusted with debt. That means you will most likely be approved of a loan. That is not the same for your child. As young as they are, they do not have a credit history yet. That means the lenders have no data to look at to gauge whether your child will be a responsible borrower or not.

This is where you, the responsible parent with the great credit history will come in. You will co-sign the loan with your child so they can be granted the loan that they need. In most cases, this is the scenario of parents with children who are about to enter into college.

While helping out your child with loans is a great support to give them, it will put your credit score in danger. In a page about co-signing loans on the website of the Federal Trade Commission, FTC.gov, it is explained that this will make you responsible for the debt as well. In case your child is not able to pay it back, you will be expected to pay the full amount plus any late charges or fees associated with it. And if your child fails to tell you that they are not able to pay off the co-signed loan, your credit score may have already dipped without you knowing about it.

Credit card use

The other way that your credit score can suffer is through your credit card. Some parents make their kids a supplementary user of their card – especially when they reach their high school years. This is a great way to teach your kids how to manage credit. However, it can put your own score in danger. After all, you are still the primary card holder. If you do not monitor what your child buys through the card, you might be in trouble already. We all know the devastating effects of credit card debt on credit reports. Do not let your kid ruin yours by racking up too much debt on your card. Let this be a great lesson for them and not are lesson to you about trusting your kid with your credit card.

How to teach kids about credit reports

The very first financial lesson that your child will learn is going to come from you. Whether this is something that you will sit down and talk to him about or let him see through your habits, they will get the first lesson from you.

It is even possible for you to teach them about credit reports yourself. This is especially true if you have a joint account with them or you listed them as authorized users of your credit card. You may want to show them a copy of their credit report. According to ConsumerFinance.gov, minors are allowed to get a copy of their credit report by the time they reach 13 years of age. Parents can also request this as long as they provide proof that they are the legal guardian of the child.

The main reason why you want to do this is because of child identity theft. It is rare that kids will request a copy of their credit report. This is probably why some criminal choose to use their identities. You want to avoid this by checking on your child’s credit report every now and then.

But even without the report that is on your kid’s name, you can show them your own credit report. Then explain to them the importance of having a good record on your report. You need to tell them that your credit score is an important qualification to have for the future.

This is only one of the personal finance lessons for kids that you need to go through to prepare them for adulthood. If you teach them about credit, you can help them understand the value of money. It helps to go through a couple of videos on the Internet to help you explain things to them.

National Debt Relief have a couple of videos that you can use – like the video below. Here are some tips that will help you lower your credit score by 100 points.

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Easy National Debt Relief Caller: April Transcribed WE 1/17/2021 April: Our call may get recorded. What financial concerns had led you to seek out National Debt Relief's services? RILEY: I guess just not being able to pay my debt. April: What had you choose National Debt Relief over other companies that provide the same service? RILEY: Really just researching online. Everything that I had read about them seemed pretty positive. April: What service or program did National Debt Relief help you to get through? Like a payment or consolidation program, anything like that? RILEY: I just do bi-monthly payment to them, and then they reach out to my debt account, I guess, that negotiated everything for me. So, it’s pretty easy. April: Can you walk me through the process of what you went through to enroll for the services? RILEY: God, it's been like two years, so I kinda don't really remember. I just had to fill out some stuff online and then talk to them on the phone. I had to give them all my account information and everything. And then they worked out a payment plan for me. And they communicate with me like once a month with my statement. And whenever they have communication with my accounts, they have called me and had me verify before they've done anything and whatnot. April: That sounds like a really good service there. RILEY: Yeah. April: At this point, are you still in the program or have you completed it at this point? RILEY: I'm almost done. It was, I think, a two-year plan. So, yeah, I think I just have one other account that I'm paying on. April: How about any interactions with the negotiators? You said they will call you at any time that there was maybe an account activity that they want to confirm with you first. RILEY: Uh-huh [yes]. April: So, how is the interaction with them when they reach out to you and you're able to discuss with them? How is that interaction? RILEY: It's been super easy and positive for me and relieves a lot of stress and anxiety. So, yeah, it’s been very easy. April: And then how has National Debt Relief been able to work with you in terms of your payment plan? RILEY: I basically just told them what I could afford, and they figured it out. And they have offered COVID relief if I need to stop payment for the time being or whatever. Fortunately, I haven't had to do that. So, I don't really know how that would have worked, but that was an option. But they're always like, “Call us if you can't make payment, and we'll figure something out for you.” April: What are your thoughts about the cost in relation to the quality of the service you received? RILEY: I'm really happy with the program. [unclear 0:04:22] as far as I know. I don't have any complaints. April: Has working with National Debt Relief impacted your life? RILEY: Yeah. April: How would you say that it's impacted your life at this point? RILEY: It just has relieved a ton of pressure and stress, financial stress, anxiety. I'm not living paycheck to paycheck now to pay my interest, so that’s been nice. April: Have you had other experiences to National Debt Relief that perhaps you want to share with us in regards to your experience with them? RILEY: No. I think that’s it. April: On a scale of 1 to 5, where would you rate National Debt Relief, if 5 stars is that you recommend to your friends and 1 star is you're very dissatisfied? RILEY: I would say 5. April: In a few words, how would you summarize overall the National Debt Relief in your experience with them? RILEY: Just easy and stress-free. April: Would it be okay for us to also utilize your commentary as a review that we can publish for National Debt Relief? And that would go to public webpage here, but that's to help other consumers make good choices if they're also in the same market. RILEY: I guess. Would it have my first and last name? I don’t— April: Only the first name. And if that's an issue, we do the first letter. RILEY: [unclear 0:06:03] you want my full name. April: Not at all. So, we only do the first name as an option. We can also do the first letter. So, it's really up to you on which option you prefer. But just the first name. We don't do last name. We don't post anything personal like your phone number. RILEY: Yeah. I think you can use my first name. April: I do offer a link that we can also send you with a direct link to your review. So, once it's published, you also get to see directly. Is that something you would like to have sent to your email? RILEY: No.

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