Here’s something that we did to help our kids. This helped them start their credit file, and it gave them a start with a good solid credit reference.
We went down to our local bank. We took out a Certificate of Deposit for $1,000. The CD had a one-year life. At the end of one year we got our thousand dollars back plus a few dollars in interest.
We then took that Certificate of Deposit and used it to take out a fully secured loan in the child’s name. We used the Certificate of Deposit as collateral. The thousand dollars on the loan went into a separate account. The payments on the loan were made from that account. This way the payments were made on time every single month. And at the end of one year -between the interest returned, and the interest that we paid, it cost us about $20 to get a good solid credit reference to get the children started on the right path.
Sound like a good plan?
