It's a great feeling to be able to take care of yourself financially and no longer be dependent on your parents for money. In case you are struggling to build your credit score or repair it after incurring debts or late payments, you might still be able to receive help from your parents to fix your credit. While your finances are ultimately your responsibility, there are opportunities for your parents to aid you in getting back on your feet to improve your credit worthiness.
Add You As An Authorized User To an Existing Card
If you are unable to obtain your own credit card because of a low credit score, you should consider asking your parents to be added as an authorized user on their card. It's a simple process that can be done over the phone or online. There are some restrictions to consider as your parents will still choose the credit limit for your card and they may want to set other rules for making transactions.
While you won't have as much freedom being an authorized user as you would with your own credit card, this approach can pay off because the accounts where you are an authorized user will also be listed on your credit report. This is good for several reasons because the main credit reporting bureaus will report your parents' credit activity as your own. The positive actions they do to support their own credit score – making consecutive on-time payments or having a good credit utilization rate – will rub off on you, which will help increase your score over time. To ensure you are getting the full benefits of being an authorized user, you should also check with your banks to determine whether they are reporting the card under your name.
Co-Sign a Store Credit Card
If you would rather have your own card, you can ask your parents to be a co-signer on the card to increase your chances of being approved. While a store card has higher interest rates than regular credit cards, they may be easier to qualify for. As a co-signer or joint account holder, you have more control over your finances, but you are also responsible for the debts accrued to the account. As a co-signer, your parents have the same responsibilities and if there are instances where they are late on payments, this can negatively impact your credit the same way as if you had the overdue payment yourself.
Evaluate Your Financial Relationship with Your Parents
Before you request to be an authorized user on your parents' card or sign off on any other financial obligation, you should make sure your parents have a clean credit history. Their spending patterns are likely to influence you and your score if you are an authorized user or co-signer on a credit card. You need to be careful about whether their ability to handle finances will be a help or hurt to your own credit situation.