“I always advise parents when the student is going off to college, unless you’re 100 percent sure they’re responsible, the first credit card that student should have is yours,” says Mike Sullivan, director of education for Take Charge America, a Phoenix-based nonprofit financial education and consumer debt service organization.
The teen should be an authorized user on the parent’s account so the adult can monitor the child’s spending. Additionally, this can help the student build good credit via “piggybacking,” a controversial practice that FICO — creator of the widely used credit score that bears its name — continues to permit among family members. In piggybacking, a parent makes a child an authorized user. If the parent has good credit, the child’s credit gets a boost.
While becoming an authorized user has long been a popular choice for students aiming to build good credit, for some it may now be the only choice. In the wake of the Credit CARD Act, people under the age of 21 now must have a co-signer or show proof of independent income if they want to get approved for a card in their own name. In short, that means that if you can’t prove to the issuer that you have the means to pay your balances, you probably won’t get a card.