Considering the right moment to designate your child as an authorized user on your credit accounts might not be as immediate as believed.
Sure thing! Here's a fresh take on the article:
Let's demystify the concept of adding your little one as an authorized user on your credit card account. It's a popular piece of advice, but it's essential to understand the ins and outs before diving in.
Some parents view it as a jump-start for their child's credit history, while others see it as a financial literacy lesson. But before you pull the trigger, there are a few things to consider.
Age check: Is Junior ready for the big leagues?
Adding a child as an authorized user kick-starts their credit history, but when should you make the leap?
Many people assume their child's credit journey begins on their 18th birthday, but that isn't exactly true. According to a 2022 Experian report, about 28 million Americans lack a traditional credit history, meaning they're credit invisible.
"Credit cards are typically one of the more common forms of accounts we see initiate credit histories," says Margaret Poe, head of consumer credit education for TransUnion. Student loans are also common early accounts on people's credit report.
But children can have a credit history for reasons beyond positive moves like being added as an authorized user. One significant reason could be identity fraud — yikes!
One in 19 children has been a victim of identity fraud in the past six years, and 1 in 116 has been victimized within the past year, according to a 2024 report from Javelin Strategy & Research. That's where credit freezes come in handy! Freezing your child's credit creates a credit file, but here's a fun fact: it's frozen!
"Consumer freeze is a great tool out there," says Poe. "It’s a good resource for families."
Moving on...
Time to score: When does a child finally earn a credit score?
While a child with a credit history doesn't necessarily have a credit score, it's essential to know the difference.
"The child will not have a credit score until they turn 18," says Andrada Pacheco, executive vice president and chief data scientist at VantageScore. Even children with a credit history – whether it be from being an authorized user on their parent's cards or other reasons – won't have scores until they reach 18.
Once they turn 18 and start building their credit on their own, it could still take some time for a credit score to generate. Getting a score requires a certain volume of information in your credit file. VantageScore can often generate a score within a month of an eligible account being added to your file, but it could take six months of activity to generate a FICO score.
In the case of young adults who have been added as authorized users, they can benefit from their parents' lengthy credit histories to pad their files. But that assumes the issuing bank reports the activity of authorized users, and not all of them do. It's essential to verify with your issuer whether they report authorized user activity or not!
Authorized user: Why add the young 'uns?
Adding your child as an authorized user may not give them an immediate credit score, but it can provide other benefits.
For starters, if your bank allows authorized users as young as 13 or has no age limit[1][4], you can add your child when they head off to kindergarten. It's one less thing to worry about as they grow older!
Or perhaps you believe your child is ready for financial responsibilities, and this is a great opportunity to teach them. Just remember that adding them as an authorized user at a young age won't necessarily give them a leg up later on. If they are added as an authorized user at age 6, their credit file will show the full age of the primary account, whether it's added when they're 6 or 16[2].
Play it safe: Reasons to wait to add the little tykes
If your child won't realize any additional credit score benefits before they turn 18, why rush the process? There are good reasons to hold off.
For one, adding your child as an authorized user creates a credit file for them, which could potentially make them vulnerable to fraud[4]. The last thing you want is for your child to become a victim of identity fraud when they're not even old enough to understand what's happening!
And, let's face it, adding a child as an authorized user is an additional financial liability. You, as the primary cardholder, are responsible for any purchases your authorized users make. Be prepared to manage the charges your child could rack up!
wrapping up
While there's no hard-and-fast rule for the ideal age to add a child as an authorized user, it's essential to weigh the pros and cons and make an informed decision. Be mindful of potential risks associated with creating a credit file for your child at a young age, and remember that credit bureaus may only report activity once they turn 18[1][2].
Ultimately, the choice is yours! Experts recommend adding children around 13–16 years of age if they're learning financial literacy. But, remember to pair it with education about credit concepts and responsible spending, no matter their age[2][5].
Enrichment Data:
- Key Considerations
- Minimum age requirements: Many issuers allow authorized users as young as 13 years old, while others have no age limit.
- Credit reporting: Some issuers only report authorized user activity to credit bureaus once the child turns 18, regardless of when they were added.
- Credit history length: The child's credit file will reflect the full age of the primary account, even if added later.
- Practical Recommendations
- Wait until financial literacy begins: Consider adding a child around 13–16 if they’re learning responsible spending.
- Avoid unnecessary risk: If the primary cardholder has poor credit habits, adding a child at any age could harm their future credit.
- Pair with education: Use the card as a tool to teach budgeting and repayment, regardless of the child’s age.
- Bottom Line
The optimal age balances issuer policies (13+ for some, any age for others) and the child’s readiness to engage with credit concepts. Since credit bureaus may not report activity until adulthood, timing is flexible.
- In light of the discussion, it's important to consider adding a toddler as an authorized user on a credit card account thoughtfully, as the child's credit history could potentially be affected by identity fraud.
- By 2025, a child with a credit history might not necessarily have a credit score until they turn 18, as generating a score requires a certain volume of information in the credit file.
- Adding a child as an authorized user, even at a young age, may not give them an immediate credit score, but it can serve as a financial literacy lesson, teaching them about credit usage and responsible spending.
- If a child won't realize any additional credit score benefits before they turn 18, it might be wise to wait and avoid potential risks associated with creating a credit file for the child at a young age. Credit bureaus may only report activity once they turn 18, and it's crucial to ensure the child is financially ready before taking on the additional financial liability.
