Bankruptcy Lawyers: Start Building Credit Early

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Bankruptcy lawyers on building credit

Bankruptcy Lawyers On Building Credit Early

RGG Law’s bankruptcy lawyers have discussed why having good credit is important in a previous blog entry. Though we all know that using and paying back credit is how a good score is achieved, how long does this take? And how early in life should we really be thinking about our credit score?

If you are a parent, should you be concerned with helping your children start out on the path to having a good credit score when it comes time for them to become financially independent? Once again, the RGG Law bankruptcy lawyers tackle the subject of good credit, and how soon to start working towards it.

Building Credit for Your Kids

You may have thought that we were joking when we mentioned parents building credit for their children, so you might be surprised to find out that you can. Setting a foundation for good credit from childhood is, potentially, a great way to give your kids a head start.

One of the easiest ways to do this is to add them as an authorized user on your credit card. Credit card companies often do not set age limits for authorized users, and you can use this as a way of teaching your kids financial responsibility and discipline, while you contribute to a healthy credit score.

However, as bankruptcy lawyers, RGG Law strongly advises you to think very carefully about it if you do consider this method. Even the best-behaved, most responsible, and most mature of our children are still children, and you need to think about how much of a risk it poses to give them this kind of financial access. Talking to our bankruptcy lawyers or a financial advisor first is the best way to avoid issues.

If you would prefer to wait until they are 18, you can also co-sign on their first credit card, or on loans they may need to take it. This will help build their credit score, but keep in mind that you are potentially liable for unpaid debts should they fall behind.

Education is Essential

Whether you are considering adding them to your line of credit, or co-signing on theirs, one of the most essential elements in starting your children out on the path to good credit is education. Too many have ended up filing bankruptcy simply because they were unaware of the risks of taking out loans, or even of more dangerous practices such as payday loan programs.

As bankruptcy lawyers, RGG Law knows the value of education about finances, and setting your own kids up with good financial sense, monetary responsibility, and the ability to effectively budget goes a long way to future credit.

Secured Credit Cards and Store Credit

Outside of the family home, there are other ways in which the younger generation can start to build good credit. Secured credit cards are a good option for someone between the ages of 18 to 21, although they may be hard to obtain due to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, introduced in 2009. However, some banks will accept young adults applications, and a secured card relies on a deposit to determine the card’s limit.

Store credit cards will increase interest rates, but also add to a credit score. Once again, it is important, especially for younger borrowers, to remember that getting a good credit score relies on regular repayment – the more lines of credit you have, the more quickly you will become overwhelmed.

Getting Started With Credit

There are no hard and fast rules about building credit. Some people start early in life, either through financial support from their family, or making regular payments on student loans or rent, while others will start much later.

Building a credit score can take less time than you might think – six months from no credit to a “good” score – but the longer you use credit, as long as you keep paying it back, the better your score will get. Starting earlier will make it bigger later in your life, making things like buying your first home, or securing a loan to start a business much easier.

RGG Law, Credit, and Help from Bankruptcy Lawyers

The expert team at RGG Law emphasizes that it is important for younger adults and children not to worry too much about their credit score. Starting early is effective, but there is no need to live your life entirely based on how good your credit is. If you need more specific guidance or advice on bankruptcy law, contact RGG Law today.

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