Is Your Kid's Credit Score Higher Than Yours?

Let’s imagine you’ve done what you can to teach your college student about responsibly using credit — and have tried to help that young adult work toward good credit scores. And it has worked — she behaved responsibly as an authorized user on your credit card. Good habits, instilled early, can pay big dividends later.

Now imagine you’re showing your son how to check his free annual credit reports. (You can do this when you’re checking yours — you do check them, right?) And just for fun, you decide to use a free online tool (like the Credit Report Card) to check his credit score — and yours. And you discover your kid’s score is higher than yours. What’s up with that?

Credit scoring expert Barry Paperno says that the very same tradeline can give the kid more points than the parent gets. “By having an old, perfectly paid and utilized credit card on a child’s report, she may be at the head of the class credit scoring-wise compared with others having a similar overall length of credit history and number of trade lines. Whereas that same account may just be considered average for her parents when compared with people having a longer history and thicker credit file,” he explains.

In a case like this, your kid’s record is likely very thin, to say the least, but doesn’t have negative information on it (yet). Your thicker file just might. Or you may have a higher credit utilization rate than your adult child, or maybe you recently applied for a store credit card and the hard inquiry dinged your credit score.

So is your kid more likely to get approved for a loan than you? Not necessarily. If your student doesn’t have an income, nobody’s going to want to extend credit to him or her. Lenders want to have proof that borrowers can repay them. (Would you want to risk extending credit to someone who had no way to pay you back, even if the person had a good reputation? Lenders don’t, either.) So your kid with the enviably high score may have less access to credit than you do.

But once your kid has an income, that good credit reputation can help him or her get a credit card on his own. Why get one? Because credit is easier to get when you don’t need to have it in a hurry. And when you do, it’s good to have it. It’s one more lesson you can teach your kid before he enters the “real world.”