Parents are increasingly taking steps to establish credit for their children at a young age, according to financial counselors. A child can have a credit score if their name appears on a debt-related account, similar to adults.
This occurs through shared accounts where parents add children to credit cards, mistaken identity cases, or identity theft. "When it comes to finances and credit, studies show that giving children an early start can create a more stable future for them," said an NFCC-certified credit counselor with over a decade of experience.
Many parents are now adding children as authorized users on credit cards with good payment histories. The account details then appear on the child's credit reports, contributing to their credit history length. Parents are advised to choose accounts with no missed payments for at least two years, low balances relative to limits, and long opening periods.
Some are also checking for credit reports in their children's names. For children over 13, reports can be requested online from Equifax, Experian, and TransUnion. For those under 13, requests must be mailed to specific addresses: P.O. Box 740241, Atlanta, GA 30374-0241 for Equifax; PO Box 9554, Allen, TX 75013 for Experian; and P.O. Box 2000, Chester, PA 19016-2000 for TransUnion.
If fraudulent accounts are found, parents contact creditors' fraud departments and credit bureaus for removal. Credit freezes are being placed on children's reports through Experian, Equifax, and TransUnion websites to prevent unauthorized account openings.
Parents are also teaching children about credit through role-playing with fake cards, discussing loan qualifications, reviewing credit reports together on AnnualCreditReport.com, using debt payoff calculators, and allowing small monthly credit card purchases with repayment. "Children can start learning financial basics in elementary school," noted the Champlain College Center for Financial Literacy.