As a kid, I spent many summers hanging out at the Jersey Shore. In addition to the annual goal of getting the deepest and darkest tan (with a little help from a few drops of iodine in baby oil) and flirting with boys on the boardwalk, my favorite pastime was riding the Wild Mouse roller coaster at Casino Pier in Seaside Heights.
While my affection for roller coasters has most definitely waned, I’m reminded of its treacherous ups and downs and fleetingly temporary plateaus when I reflect upon giving my 18-year-old son his most important financial lessons — including earning a fantastic credit score — before he heads off to college this fall.
The ride begins
After he got his first job working at a local snack stand one summer after his freshman year, I opened a checking and savings account for him that was linked to my account. He took great pride in his new debit card and felt very grown up to have one. What was nice was that I was able to review all his purchases — of which there were many — which led to many teachable money moments.
In those early debit card days, when he realized he could use his card on Amazon.com, the UPS truck arrived at our house so often that the UPS delivery guy and I were on a first-name basis. I specifically remember a delivery of Sharpie pens. Sharpies? “They were on sale!” my son cried out when confronted with the umpteenth delivery that week.
The Amazon orders came to a screeching halt, however, after he depleted his funds, which resulted in $100 overdraft that landed on my credit card. I promptly (and frantically) called the bank and turned off overdraft protection.
His true day of reckoning came the second time he overdrafted and was refused a purchase at a local convenience store. He experienced having to walk the debit-card-declined hall of shame and had to leave the store empty-handed. Apparently the experience was mortifying enough for him to suddenly pay attention to those text alerts I set up with the bank to inform him of his balance.
Getting a credit score: The rickety ratcheting upward climb
Having read numerous letters from young readers at CreditCards.com whose relatives stole their identity and opened credit cards in their name and then didn’t pay the bills (thereby ruining the kid’s credit), I wanted to know for sure that no one had done that to my kid.
It wasn’t easy. I discovered you can’t pull a credit report on anyone under 18 because, technically, they aren’t supposed to even be allowed to have credit before then. You have to write a letter to the credit bureaus with all this extensive documentation (birth certificate copy, etc.) requesting that a credit report be pulled.
So I tried calling the credit bureaus. They wouldn’t talk to me, but they would talk to my son, who was maybe 16 at the time and had no idea what to say when I handed him the phone. We muddled through, however, and several weeks later copies of his credit reports showed up in the mail. To my relief, the reports were devoid of any evidence of identity theft.
I can’t recommend highly enough to other parents to go through that exercise. The amount of effort expended is minuscule compared to what it would take to clear up your child’s credit if someone else has left them with unpaid debt they never accrued on their own.
Arms up, ready for the downhill slide
Just before he entered high school, I added my son as an authorized user to one of my credit cards to help him start
building up good credit by “piggybacking” on mine. Mind you, I never actually gave him the card to use out of fear that he’d find all kinds of “emergencies” with which to use it, so when it came in the mail, I just tucked it away.
I was familiar with young adults’ challenges and the benefits of having a solid credit history and thought this might help him get a leg up. I also was aware that the then-pending Credit CARD Act of 2009 was looking at severely curtailing credit for young adults under 21, which it eventually did.
When explaining how credit scores worked, I found that my kid was actually intrigued by the whole process — he really wanted me to help him get a high credit score. Maybe it was the whole “my score is better than your score” thing, but he wanted a good credit score. So, onto my card he went.
The best news came when it occurred to me just last week that since he is now 18, he can pull his own credit report and score. I was thinking that maybe he had a score in the mid-600s or so. We went to myFICO.com and, after showing him how to avoid myFICO’s fairly deceptive trick of signing you up for a monthly “free trial” of “Score Watch” (and you’re not shown how much that monthly service is upfront), we paid $19.99 for a credit score from TransUnion.
His score? 760. Imagine that. An 18-year-old with a credit score in the mid-700s. I’m certainly not a perfect mom, but boy, I earned the Mother-of-the-Year Award that day.
Back in the trough, ready for the next climb
What’s next on my son’s financial horizon? Student loans, living on an allowance and working hard every summer for spending money. But for now, we’ll just rejoice that we’ve made it this far without falling off too far off the tracks.