Living in today’s world with ever-changing digital scams and more frequent online personal information data breaches, how can we protect the credit histories of the next generation? Simply being deemed old enough to have a credit card does not mean one should own a credit card or use it. The answer lies in our query about being smart about credit—and credit cards—by educating young adults in best practices and offering protection against outsiders.

Educate to Empower

Have an influential member of a wise generation sit down with teens chatting about the three big credit bureaus: TransUnion, Equifax, and Experian. Inform teens what a credit report is and its components. Be certain to mention each brand keeps its own report. Next, educate them on what is a credit score. Mention how soft credit inquiries vs hard inquiries impact the score. Finally, talk about how their credit score differs from their credit report. By understanding these foundational concepts and tools, they’ll be empowered to make informed credit decisions.

Put A Freeze on It

Applying a credit freeze to a minor’s record is an initial step to defending their future by protecting your child against others fraudulently applying for and being granted credit. For those aged 16 and older, they are able to freeze their credit. Retain the unlock PIN, issued by each of the credit agencies, as part of their other vital life records (birth certificates, passport, social security card) for future reference. When the time to apply for credit arises, being forced to unfreeze their credit requires younger adults to delay a choice slightly. One that often protects themselves from a risky or impulsive credit decision.

Built-in Guard Rails

Adding your teen or twenty-something as an authorized user to a family member with a strong credit history is one path to building their own credit history, but with some protections. Be certain to confirm with the card issuer that authorized parties’ spending is reported to the credit bureau. This is the vital step to ensuring that good history is reported, and begins building a credit history for your teen. Alternatives to offering usage of credit card privileges include securing credit via rental housing providers (off-campus housing) and utility providers.

Just Say No

Companies offer discounts to entice people into applying for a card, while other brands tout special perks or status just by carrying their card in your wallet. Empowering a financially undereducated spender gives them the ability to quickly wreak havoc on their financial security, both current and future. Credit is like fire in that it is very good when under control but extremely damaging should it get out of control.

At Organized Instincts, our daily money managers help you understand your credit score. Schedule a call today and learn how hiring a daily money manager protects your good credit score.
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