College is a transitional period in so many different ways: On one hand, students are taking the first steps toward adult life and the pursuit of a career. But on the other, they may still rely on them for at least some financial support.
"Parents and students should be careful when sharing access to credit."
Taking this into account, it's perfectly reasonable for you to share a credit account with your parents, either by becoming an authorized user on their card or co-signing on a credit line for a joint account. But it's essential for you to exercise caution while doing so. Let's take a look at the biggest pros and cons of this financial decision.
Pro: Students know they're covered for essential and emergency expenses
Things get hectic once you get into the swing of daily life as a student. As such, it'll be good to know that certain things won't become a problem - like buying that trigonometry textbook or replacing the pillowcases you ruined with spilled soda. Having access to your parents' credit card can help ensure this.
Pro: Sharing the wealth of good credit
Timely payments - above the minimum, if possible - are always good for credit scores. Whether you or your folks are making them, you both reap the benefits, according to NerdWallet. This can be helpful down the line when you're making major financial decisions - like buying a car or a home.
Con: Bad credit is also shared
Card issuers aren't obligated to be understanding. They won't parse who charged what when you or your parents make bad credit decisions. As explained by Bankrate, if you're an authorized user, you won't bear the same responsibility as the primary cardholder, though you may still owe some debt. On a joint credit account, everyone is liable regardless of circumstance.
Con: Increased fraud risk
Just as joint cardholders are bound to the credit-affecting decisions each person on the account makes, fraud risk goes up because more than one person uses the card. The most cybersecurity-conscious person in your family should establish solid habits for keeping personal and financial data under wraps, and ensure everyone remains on the same page regarding this matter.
It's not the easiest thing to build good credit at any age, and when you're a student just entering the real world, it can be even more difficult. As such, it may be worthwhile to consider the benefits that an alternative credit report can offer - one that assigns positive value to rent payments that garden-variety reports often ignore. Contact MicroBilt today to learn more.