Add a child to a card you pay in full

There is a tip that sounds almost too easy: add your child to your credit card as an authorized user, and when they are grown they will already have years of credit history. Many people say it works. Some people say it did nothing for them, and people do not agree on how much it is worth. What follows is what holds up, what it costs, and who carries the risk.

Add a child to a card you pay in full every month, tell them you did it, and treat it as a small head start, not as their credit.

This page is for an adult in the United States whose own card is paid on time. If you miss payments or carry a large balance, adding anyone puts your record on theirs, so skip it. If you live outside the US, this page does not cover you. And if you are a young adult who found an account you never opened, the last section is yours.

What being added does

An authorized user is a person whose name is on someone else’s account and who can use the card. The account holder is the one who owes the bill; FICO, the company behind a widely used credit score, says an authorized user is not legally responsible for the debt on the account.

Many people say adding a child puts the card’s payment history and age on the child’s credit report, so the child starts with a record older than they are. Many people also say that happens even if the child never sees the card. How much it helps is where people split. FICO’s own answer is that it depends on the version of the score: in older versions an authorized user’s account counts the same as the holder’s, and in recent versions it has less impact than an account you hold yourself. Some people say they were authorized users for years and were still turned down for credit because they had no history of their own. One person says the status may not show in a score until the person has an account of their own open as well.

That is why the sentence above says a small head start: the effect depends on the score version and on the lender, and you cannot see either in advance.

What it can cost, and who pays

The history works in both directions. FICO says that if the account holder misses payments or runs high balances, the authorized user’s score can be hurt too. Some people say the same: it only helps when the holder manages the card well, and a holder who misses payments or carries high balances damages the child’s credit instead of building it. Some people warn that if a parent stops paying a card with a child’s name on it, the damage to the child’s report can take years to fix. FICO adds the part that limits it: the authorized user is not legally responsible for the debt, and if the account has problems they can ask to be removed and the account will come off their report.

You are the one who owes what is charged. Many people suggest keeping the physical card yourself, and some people warn that a young person holding a card can run up charges that land on the account holder.

Tell the child. One person warns that a young person who comes across an account they were never told about may take it for fraud and contest it, which wipes out the history it was building.

Ask the card company before you add anyone whether it reports authorized users to all three credit bureaus. Some people warn that authorized user accounts are not reported the same way to every bureau, and one person says some card companies do not report them in a way that builds history at all.

Big loans are a different test

Some people say an authorized user account alone does not satisfy a lender for a car loan or a mortgage, and that the borrower needs accounts of their own. For one kind of home loan, Fannie Mae’s lender guide agrees. For loans underwritten by hand, it says an account that lists the borrower only as an authorized user cannot be counted, with exceptions such as a spouse’s card or proof that the borrower paid the account alone for at least 12 months. Loans run through its automated system follow different rules.

If you cannot add them, or they are not ready

A person under 18 cannot sign a card contract, one person points out, which is why authorized user is the route for a young child. After that, the government’s consumer finance agency says a card company generally cannot issue a card to someone under 21 unless they can show their own ability to pay or an adult over 21 co-signs, and that a co-signer’s own credit is hit when the young person pays late. The agency names two ways to start without a parent’s card: a secured card, backed by cash you put in, and a credit-builder loan from a bank or credit union.

Some people suggest getting a card in your own name early, with a low limit, and clearing the balance every month; they say starting late is harder. One person says having no score is less damaging than having a bad one. Some people say paying bills on time is what matters and the whole preoccupation with scores is overdone; others reply that having no history at all makes the first approvals harder. Some people call adding a child disgraceful if it ends in harm, and others call it a tool in a flawed system; you can hold both views and still decide.

Protecting a young child’s file

If your concern is someone opening accounts in a young child’s name, the Federal Trade Commission says a parent can request a free credit freeze for a child under 16 to make that harder. Each of the three bureaus does it separately.

When an account was opened in your name without you knowing

Some people describe finding a card or a debt opened in their name by a parent, sometimes explained as help and sometimes not. Some people say to treat it as fraud and dispute it, and some say to file a police report. Here is what the federal government says to do about an account you did not open:

1. Call the fraud department of the company that opened it and ask them to close or freeze it.
2. Place a free one-year fraud alert by contacting one of the three credit bureaus.
3. Get your free credit reports at annualcreditreport.com or on 877-322-8228, and look them over.
4. Report it at IdentityTheft.gov for a recovery plan.

One person warns that confronting a parent does not by itself close an account, so check with the card company that it is closed. One person suggests that, when you are legally able, you move your money out of any joint account with a parent into separate accounts at a different bank.

What to do about the person who did it is a separate choice. Some people say report it and accept what follows. One person says paying it off and moving on may be better, especially if the parent is helping with college. Some people warn that reporting a parent can mean estrangement, and one person warns it may get you put out of the house; one person says to have somewhere to stay lined up first if you live with them. This page does not choose for you.

Who this page is not for

If you pay your card late or carry a large balance, adding a child is the wrong tool, because your record becomes theirs. If you live outside the US, the mechanics are different and may not apply. If a parent or other adult already controls your money in a way that frightens you, a credit report is the smaller problem, and the numbers above are the place to start. And if what you need is the step-by-step of disputing every account or of suing a relative, this page does not cover that; IdentityTheft.gov is where the federal recovery plan starts.