DD Turning 18 - Building Credit

Loadedboy

Hi everyone 

My oldest is just turned 18

I would like to help her build a great credit score 

What's should we start with?
Something for everyday spending?
What's products should we apply for

Credit cards, over draft?

I had a quick look at credit cards but the system (mse pre check) says she can not get any of them yet

Should I put her on the electoral roll first?

grumpy_codger

Loadedboy said:

Hi everyone 

My oldest is just turned 18

I would like to help her build a great credit score 

What's should we start with?
Something for everyday spending?
What's products should we apply for

Credit cards, over draft?

I had a quick look at credit cards but the system (mse pre check) says she can not get any of them yet

Should I put her on the electoral roll first?

What she needs is credit history, not some 'score'.

Start with an inexpensive mobile contract (SIM-only, no fancy phone) and electoral roll. A credit card will be the next step, few months later.

tacpot12

I'm not sure why you are encouraging your daughter to take out credit she doesn't need. 

Emmia

tacpot12 said:

I'm not sure why you are encouraging your daughter to take out credit she doesn't need. 

There are lots of threads with parents who want to get their kids a "good credit score" for no other reason than to have one. A credit score (aside from the fact they're made up fairy numbers) is really only needed if you want/need credit or borrowing - to provide a company with some certainty you'll pay your debts.

The fact is, 18-year olds can go wild with sudden access to "free" money, and then don't have the resources to pay it back in full every month avoiding interest.  (I was that 18 year old, but I got myself into that pickle, my parents were horrified I'd taken credit out). 

I'd therefore say (based on my own experience) that a credit card is a dangerous thing. A mobile phone contract is probably as far as I'd go with "credit".

@Loadedboy what actual income does your daughter have to pay for things (like a phone contract) / pay off her credit card bill in full every month (thereby avoiding interest).

fatbelly

Does she have her own bank account? Does she keep it in credit? Does it have a debit card?

Is she on the electoral roll?

https://www.gov.uk/vote-uk-election

That's all she needs for now.

born_again

Does she have a mobile contract?

Loadedboy

Thanks for all the feedback 

As for the questions about getting a credit score or her using credit...
I earn very good money from having a good score, via cashback and points etc via credit cards so trying to help her get on This path too
Of course paying everything off IN FULL every month 

grumpy_codger

Loadedboy said:

I earn very good money from having a good score, via cashback and points etc via credit cards so trying to help her get on This path too
Of course paying everything off IN FULL every month 

It's hard to believe that you can earn noticeably more than 1% cashback available with a debit card, but, although savings rates are falling, you still can make more from 0% on purchases and/or balance transfers.

Emmia

Loadedboy said:

Thanks for all the feedback 

As for the questions about getting a credit score or her using credit...
I earn very good money from having a good score, via cashback and points etc via credit cards so trying to help her get on This path too
Of course paying everything off IN FULL every month 

But does your daughter also have a good income, or are you intending to pay her credit card bills?

Points and cashback credit cards are only worth it if the bill is paid in full every month...

Your score, however good remains a meaningless fairy number. It's the contents of your file that matter.

RAS

Your daughter has a whole load of new responsibilities by virtue of turning eighteen. Everything from being able to consent or not consent to a tattoo, or to getting married (assuming England and Wales), to being treated as an adult if she does something wrong.

Does she have an independent income, not just an allowance from you? Hopefully you've previously helped her arrange a junior bank account and have not been bailing her out if she got in a pickle? Has she been managing her own savings account(s)?

Does she even want the hassle of ensuring that there is enough money in her bank account to pay any credit card on the precise day each month? Does she want to work part-time rather than spend time with her friends?

The whole point of being adult is that she makes her own mistakes and learns from them, not that daddy directs her towards something she may or may not want to do at this stage in her life. 

born_again

Loadedboy said:

Thanks for all the feedback 

As for the questions about getting a credit score or her using credit...
I earn very good money from having a good score, via cashback and points etc via credit cards so trying to help her get on This path too
Of course paying everything off IN FULL every month 

Lenders never see you credit score. It is a made up figure by the CRA 🤷‍♀️