How I’m helping my 2-year-old build credit

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My son should be in great shape to borrow as an adult.


Key points

  • Thanks to how credit scores work, even a two-year-old can have a good credit score.
  • By helping my son get on top of my financial record, I’m giving him a head start.

Building credit can be a challenge, especially if you start late. Without a credit card or other debt to show that you’ve borrowed and repaid money, it’s hard to develop a strong balance sheet that entices businesses to lend to you. In other words, you may not get the credit you need to build credit.

The good news is that there are steps parents can take to make sure their kids can start life with good credit and don’t have to go through a rough patch or rely on secure cards to get a credit report. I took one of the simplest but most important steps to help my son build his credit, even though he is only two years old.

My technique for helping my son build credit cost me nothing and only took seconds, but he will enjoy it for decades.

This simple step is helping me improve my son’s credit score

I simply contacted the issuers of several of my oldest credit cards with high credit limits and strong payment histories. Then I asked these companies to list my son as an authorized user on my credit card accounts. All it took was a phone call (or, in some cases, logging into my account and applying online).

As soon as I added my son as an authorized user — I did when he was a few weeks old — a credit file was created for him, indicating that this account was his. In other words, even though he wasn’t even a month old, he had a credit history that spanned decades and showed 100% on-time payments.

Why does adding your kids as an authorized user help them build credit?

Adding your children as an authorized user on your credit cards helps them build credit because of how the credit scoring formula works.

Your credit score is determined by:

  • Your payment history
  • The average age of your accounts
  • The percentage of your available credit that you are using
  • The number of requests (requests for new credit)
  • Types of accounts

When my son was added as an authorized user, he enjoyed a higher average credit age, as well as a credit card with a high credit limit and low credit utilization rate. It also gets a higher score because every payment was made on time. There is no downside, as he is too young to use the card.

Any parent who has a long-standing credit card with strong financial credentials can use this technique, and their children can build up credit through a parent’s loan. It’s worth thinking about, as it can make it easier for your child to get started in your financial life.

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