Q: My daughter is turning 18 soon, and I would like to help her start establishing credit. We added her to our credit card when she started driving, and she has proved that she is responsible. What is the best way to give her the opportunity to start a credit history?
A: You are smart to start thinking about credit history now. A good credit score takes time to build up and is crucial when your daughter gets to the point when she rents her first apartment or applies for a car loan. The first thing you need to do is check her credit report. You can order a free report every 12 months from the credit reporting agencies (Experian, Equifax and TransUnion). If there are any problems or identity theft issues it is important to clear those up immediately. Next, consider co-signing for either a debit card linked to her bank account or a credit card with a small limit. (Remember, you will be responsible if she abuses the card, so make sure that you keep an eye on the statements.) She will need to make small purchases, pay off the card each month and be patient. Credit companies need to see a history of responsible credit behavior.