Helping your child clean up any credit mistakes before they leave for college is important to ensure they start their adult life on the right financial footing. We have bundled together some steps you can take to assist them:
1. Review their credit report
Obtain a copy of your child’s credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion). Review the report together to identify any errors, discrepancies, or negative items that need attention.
2. Dispute errors
If you find any errors on the credit report, help your child dispute them. Contact the credit bureaus in writing, providing documentation to support your claim. The bureaus have 30 days to investigate and respond.
3. Pay off outstanding debts
If your child has any outstanding debts, work together to create a plan to pay them off. Prioritize high-interest debts first and encourage your child to make regular payments to improve their credit score.
4. Set up payment reminders
Help your child establish good payment habits by setting up automatic payment reminders for their bills. Late or missed payments can negatively impact their credit score, so it’s crucial to stay on top of due dates.
5. Educate about responsible credit use
Teach your child about responsible credit card use, emphasizing the importance of paying bills on time, keeping credit utilization low, and avoiding unnecessary debt. Encourage them to only use credit cards for essential expenses and to pay off the balance in full each month.
6. Monitor credit regularly
Encourage your child to monitor their credit regularly to identify any new issues or potential fraud. They can sign up for free credit monitoring services or use apps that provide credit score updates.
7. Establish good financial habits
Help your child develop good financial habits by teaching them about budgeting, saving, and living within their means. These habits will not only benefit their credit but also their overall financial well-being.
8. Consider a secured credit card
If your child doesn’t have a credit history, consider helping them apply for a secured credit card. This type of card requires a cash deposit as collateral and can help them build credit responsibly.
It’s important to involve our children in the process of taking loans and educate them about credit management. By doing so, you’ll empower them to take control of their financial future and avoid credit mistakes as they grow. These 8 steps will help you & your child in their credit and ensuring they are credit free by the time they join college or university.
