Besides, there's little need to worry they won't be able to establish a good credit history. With the sophistication of the automated credit scoring system, it takes only about six months to create a credit history, according to Craig Watts, public affairs director at FICO, the company that produces the FICO credit scores.
To enable the three credit bureaus to calculate a person's credit score, the person's file at the agency needs to meet three conditions:
-- You need a credit or loan account that is at least six months old. "This ensures that enough credit activity is available to produce a reliable credit risk score," Watts said.
-- You need a credit account that has been updated by the creditor at least once in the past six months. "This ensures that enough recent activity is available to produce a reliable score," Watts said. "While the FICO score considers all the credit history on a credit report, it gives more weight to recent activity.
-- Your credit file can't indicate you're "deceased."
Worried about your child getting a job without a good credit history? Don't.
Most employers don't do a credit check. And even those who do pull a potential candidate's credit report are looking for signs that someone has been financially irresponsible. A new college graduate or young adult can easily explain the lack of an extensive credit history.
There are a few other provisions in the new law that make it harder for credit issuers to get their hooks into young people.
Issuers can't entice college students into applying for credit cards by offering them T-shirts or teddy bears. Gifts to college students in exchange for filling out a credit card application are prohibited.
Issuers can't send prescreened credit card offers to people under 21 unless the consumers have consented to receive these offers. The law bans card issuers from raising the credit limit on accounts held by a person under 21 unless the co-signer gives written permission for a higher limit.
Clearly the best part of this new law is the authority it gives the parents or guardians of young adults to keep them away from debt a little longer. Please exercise that power.