Why are they giving so much credit to my young daughter?

justsayyes

My daughter turned 18 approximately 5 weeks ago. She begins university in just a few days. She's had a bank account with Lloyds TSB for about 6 years. She recently went in there to upgrade to the Student Account in preparation for uni. The bank adviser told her that she had been handling her account extremely well for somebody her age (presumably this means she has a good behavioural score with them?). She has two part-time jobs, has her salary from both jobs mandated into her Lloyds account and has been pretty sensible with it and also has savings of a couple of thousand on her Lloyds Instant Saver.

Anyhow, I have just learned that since turning 18 she has suddenly started applying for multiple credit. Lloyds gave her a Student credit card with a limit of £500. But now Marks and Spencer have granted her a credit card and so have House of Fraser. I believe she's been approved for something from Top Shop too. I've told her to stop. She is going to be a full-time student obviously living on a very low income.

But why on earth are all these companies extending her credit anyway?? She is not linked with me or her dad on our credit files. What on earth could Marks and Sparks etc see on the credit file of a child whose just turned 18 that would make them feel confident about extending credit to her?

Ben1982

But why on earth are all these companies extending her credit anyway??

A number of these: ££££££££
If she's not careful, she'll probably get to a stage where she can only pay the minimum each month, which means she starts paying interest, which is where they'll rake in the cash.

If she's savvy in time she'll be able to turn this against them. Get her reading MSE, hopefully she'll be able to make some money out of them instead

louby_lou

i'm afraid your daughter is in their target demographic. Yes students live meagerly, but they are also pressured to keep up with their friends with the latest phones, gadgets, fashions as well as eating and drinking their way through their degree.

I was in the same situation, creidt was flying at me when i was that age. unfortunately you cant tell your daughter what to do, but just advise her that after 3 years of uni and student loan she will have approximately £12k plus of debt without her adding to it. I'd advise her to have a look on here and read the posts of we ex-students living with the bad debt which we built up in those carefree years. hopefully she will see sense before I did

good luck - louby xxx

justsayyes

louby_lou wrote: »

i'm afraid your daughter is in their target demographic. Yes students live meagerly, but they are also pressured to keep up with their friends with the latest phones, gadgets, fashions as well as eating and drinking their way through their degree.

I was in the same situation, creidt was flying at me when i was that age. unfortunately you cant tell your daughter what to do, but just advise her that after 3 years of uni and student loan she will have approximately £12k plus of debt without her adding to it. I'd advise her to have a look on here and read the posts of we ex-students living with the bad debt which we built up in those carefree years. hopefully she will see sense before I did

good luck - louby xxx

Thanks. It's scary to me that companies extend so much credit to youngsters. Hopefully they are all giving her low limits.

doelani

I understand your concern , my 18 year old daughter ( 18 in june ) went to change her step account to current account so she could get a debit card. She came home to say she had turned down overdraft but they had given her a credit card, when it came it had £1000 limit on it . She is in tempory job and bank know this.

Luckily she is sensible and has not used it , I explained to her how it works and also the pitfalls if she cannot pay and how it can effect her. I just hope she listens.

My 19year old son who has slight learning difficulties and is absolutly usless with money ahd an Argos card delivered a few weeks ago, he says he did not know what it was they were giving him , he though it was a card to collect points like a Tesco card, afraid on that one I stook with him when he phoned and cancelled it . I dread to think what woudl have happened if I had not seen it delivered as I open his post as he cannot read very well.

HeadInSand_2

justsayyes wrote: »

Thanks. It's scary to me that companies extend so much credit to youngsters. Hopefully they are all giving her low limits.

They will be low...then she'll near the limit...then they'll extend it...then she'll near the limit...then they'll extend it. That's how they trap people. Thankfully my parents forbade me from getting a CC whilst I was at uni. Although I didn't heed what they said when I graduated and entered the murky world afterwards! I think some tough love may be the order of the day, get her to read some real life tales of woe & terror on here. It's all too easy to buy that iPod then a new mobile, then this, then that etc etc.

exel1966

justsayyes wrote: »

My daughter turned 18 approximately 5 weeks ago. She begins university in just a few days. She's had a bank account with Lloyds TSB for about 6 years. She recently went in there to upgrade to the Student Account in preparation for uni. The bank adviser told her that she had been handling her account extremely well for somebody her age (presumably this means she has a good behavioural score with them?). She has two part-time jobs, has her salary from both jobs mandated into her Lloyds account and has been pretty sensible with it and also has savings of a couple of thousand on her Lloyds Instant Saver.

Anyhow, I have just learned that since turning 18 she has suddenly started applying for multiple credit. Lloyds gave her a Student credit card with a limit of £500. But now Marks and Spencer have granted her a credit card and so have House of Fraser. I believe she's been approved for something from Top Shop too. I've told her to stop. She is going to be a full-time student obviously living on a very low income.

But why on earth are all these companies extending her credit anyway?? She is not linked with me or her dad on our credit files. What on earth could Marks and Sparks etc see on the credit file of a child whose just turned 18 that would make them feel confident about extending credit to her?

Lloyds operate a behaviour score of 0-9 based upon payments in and out/number of accounts/savings/overdraft usage/length of time with bank etc. The function of bank staff today is primarily to sell their accounts to the customers (better if they're good customers) and that is what Lloyds are doing as they have targets to meet. Students are considered easy prey and are susceptible to signing up for accounts/cards when not being neccessarily required.

Applying for multiple credit cards in a short time span will damage your daughters credit file temporarily and will ultimately make it more difficult for her to obtain further credit as all her accounts will be visible to potential lenders and may set alarm bells ringing. She will probably soon get her first rejection if she continues to apply. Too much available credit, let alone actual debt is not good especially for a low earner as that's when the problems usually start.

Other lenders will be able to see her management of other cards and based upon that your daughter may receive a mailshot saying she's been pre-approved for credit which actually means that's she now 18, is able to have credit and fits into their profiling, therefore she can legally be targeted just as you can be. Your daughter just needs to be disciplined in what she accepts and applies for.

However, having one card, maybe two at a push and being sensible with it/them and managing them well will demonstrate her financial abilities in the future for when she really needs the credit

benf90

I took a year out (and worked in a full time job) before going to university and Lloyds TSB gave me a credit card with a limit of £3,000 when I went to change my account into a student account (I was then aged 19).

This was one of the then standard Visa cards, not a student one.

That too struck me as a bit irresponsible at first, but I did have approx £4,000 in savings with them at the time. I'd also already had another credit card which was paid in full every month and a mobile phone contract, so I did have an existing positive credit history.

I suppose you look at your daughter as a child (you used this word in the first post), but the banks will look at her legally as an adult able to make her own decisions. I suppose the more cynical would also say they'd look at her as an easy target.

But, whilst there's people that go off the rails aged 18, there's also people like me that don't. It's not only young adults that find it difficult to control their finances, so whilst age may be an important factor it may not necessarily be the main factor as to whether credit is approved/declined.

I agree with HeadInSand in terms of making sure she knows what can happen etc.

My parents didn't appear to be worried when I first started to take out credit. But I'd say that was because I was open about it and made it clear from the outset that I knew what I was doing.

Is your daughter the type of person who would want to get their own place after they leave university etc? If so it may be worth letting them know how adverse credit can stay on file for 6 years.

The main reason I started to use credit cards is to build up a positive credit history so that when I come to buy my own place, or if I need credit for something in the future, I'll be able to obtain a decent rate etc.

The only thing you can really do is make sure they're aware of the pros/cons and how credit cards work.

tictax

Also make your daughter aware of the importance of keeping up repayments. If she gets into difficulties this will still have an impact in the years to come ie when she graduates from uni and is looking to rent or even buy a house.

I would also make her aware that you aren't going to bail her out (which I hope you wouldn't do) if she does struggle.