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Establishing credit practices for young adults can prevent future debt problems

By Dave Edmark
U of A System Division of Agriculture
May 20, 2016 

Fast facts:

  • One-third of young adults struggle with inability to manage debt
  • Parents can help by teaching kids how to use credit wisely
  • Joint credit accounts for parent and child can be good teaching tools

(481 words) 

LITTLE ROCK, Ark. – Young adults’ ability to manage their personal debt might be traceable to the guidance they received – or didn’t receive – from their parents. Parents who teach their children the basics of personal credit can influence their financial behavior when they go into the world on their own. 

“One in three young adults from ages 18 to 34 report that they are struggling with the inability to manage debt,” said Laura Hendrix, an extension personal finance expert for the University of Arkansas System Division of Agriculture. “Consumers with the highest credit scores qualify for the best interest rates on home and car loans. Lower interest rates can save thousands of dollars over the life of a loan. Landlords, employers, and insurance agents often use credit scores to assess the risk of doing business with someone.” 

Hendrix advises parents to start by teaching their children how to check a credit report. The three main credit reporting bureaus – Equifax, Experian and TransUnion – each provide individuals one free report each year. They can check a different report every four months by going to Parents should instruct their children how to look for incorrect information on the report and how to contact the credit bureau if errors or suspicious activity appear. 

The children themselves can start a credit history and build a credit score with some parental supervision. A parent can add a young adult child as an authorized user or co-sign an account with the child. But there are risks to consider. 

“You are responsible for paying the debt,” Hendrix said. “Your good management of the account will reflect positively on building your child’s credit score.  However, if you have late payments and keep the card maxed out, this will not only hurt your score but can also damage your child’s credit score.” 

A parent can co-sign a credit card with a child, but it’s important to remember that the parent and child are equally responsible for paying the bill and that the child’s actions can hurt the parent. In this case, the child’s overspending or late payments can harm the parent’s credit score. 

“Make sure your child knows what purchases are acceptable to charge on the account,” Hendrix said. “Set usage limits. Co-signed cards can have a low limit to keep your child from overspending. A low limit keeps total debt to a manageable amount in case you end up having to pay all of the charges.” 

Parents can help by being good role models for their children, who are likely to repeat behaviors they observe in their parents. Hendrix urges parents to talk to their kids about good financial management practices, live within their income and limit their own use of credit.  They should make more than the minimum payment or pay off balances monthly and pay all bills on time.   

More personal finance recommendations are available at


The University of Arkansas System Division of Agriculture offers all its Extension and Research programs to all eligible persons regardless of race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer. 



Media Contact: Mary Hightower
Dir. of Communication Services
U of A Division of Agriculture
Cooperative Extension Service
(501) 671-2126

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