Why Your Child Needs a Credit Score

Dear Ken: I was told to avoid credit and debt and to save and pay cash. Is this the best course of action.

Answer: Tiana graduated from high school at the top of her class with College Scholarships to numerous colleges and graduated Magna Cum Laude from her chosen college. By all accounts Tiana was an excellent student and a great manager of her time. 

Tiana was offered several generous employment opportunities upon graduation and she and her family believed that she was on her way. But then everything went downhill.

Tiana never owned a credit card and did not have any loans in her name. In order to accept the Job of her dreams, she would have to move to a faraway city, rent an apartment, purchase a car and get auto insurance.

The Job Recruiter explained to Tiana that as part of the hiring process, she would be required to grant permission to check her credit scores. 

The Job Recruiter would later inform Tiana that she did not have a credit score, but that the company would be willing to overlook this issue since she was a newly minted college graduate at the top of her class. But that really did not address all of Tiana’s issues.

Tiana soon learned that she would need a co-signer in order to rent an apartment and the same issue applied to purchasing a car, although the Job Recruiter did inform her of some excellent purchasing options for new college graduates.

Because Tiana didn’t have a credit score, she had to purchase auto insurance at a higher premium.

In school we are taught the importance of Good Grades, but it is equally important if not more so to have Good Scores, Credit Scores that is. 

Many well-meaning parents instill in their children to avoid credit which they perceive as equivalent to debt. However, establish good credit does not require the accumulation of debt, it simply requires a demonstration of the ability to manage credit.

Credit scores aren’t meant to gauge how well you manage money or debt. They’re meant to gauge how well you handle credit. 

Please plan for your child’s future and take steps to make sure that they have a Good Credit Score. For more advice reach out to me (GoAskKen.com)

Ken Embry, Trusted consumer Advisor, is a personal finance consultant for GoAskKen. Questions may be sent to him by using the “Contact” form at GoAskKen.com.