Happy mother and daughter talking while having coffee in living room

The college years provide kids with their first chance to begin building up a healthy credit score. However, it’s important for parents to give them some guidance on using credit cards wisely. Otherwise, college age kids can end up getting in over their heads and having a low credit score and poor credit history. Keep these tips in mind, so you can discuss the responsible use of credit with your kids.

Explain the Importance of a Good Credit Score

It’s important for kids to understand how responsible credit card use can benefit or hurt them in many ways. Talk to your kids about the factors that affect credit scores, such as paying bills on time, keeping a low balance and not having too many balances or credit inquiries. Make sure they understand that factors that bring down their credit score can have an impact on different areas of their life that they might not expect, such as getting a job after college and getting an apartment.

Discuss the Costs of a Low Credit Score

Lower credit scores can end up costing your kids more money in terms of having to pay higher deductibles on auto insurance or having to pay a deposit when setting up utilities. They might also have to pay a higher security deposit in order to rent an apartment. Remind them that there are other costs that can add up when they don’t use credit responsibly, such as late fees and higher interest rates.

Provide Tips on Responsible Credit Use

Once your kids understand why it’s important to maintain a good credit score, give them advice on how to use their credit cards wisely. This includes making sure they pay their full balance on time each month, never going over their credit limit and never using one of their cards to make payments on another card. They should also avoid taking cash advances on their credit cards. Ideally, your kids should start with just one credit card each, which gives them a chance to build a good credit score with a lower risk of being tempted to overspend.

Talk About Wants vs. Needs

It’s easy for college age kids to get into trouble with their credit by using it to purchase things they want rather than things they need. Discuss the importance of using credit cards for practical purchases, such as textbooks for school or gas for their car, instead of using it for items they don’t really need. This helps ensure that they’re using their credit card for things they need to budget for out of necessity and makes them less likely to use their card for things they don’t have money for.

If your kids have already run into trouble with their credit, contact the credit repair team at Build My Scores. We offer a free consultation with experts who can help them improve their score and build healthy credit habits.