However, new laws are coming at the end of February that will make it more difficult for people under 21 to get a credit card unless they can prove they have the income to support it or can get an adult to cosign for the account. The new regulations come from the Credit Card Accountability, Responsibility and Disclosure Act and take effect February 22.
Part of the reasoning behind the new regulations for young people is to keep them from amassing more debt while in college. According to Sallie Mae, the average amount of credit card debt for graduating college seniors was $4,100 in 2008, up from $2,900 in 2004.
Though credit card debt may be a problem for some younger people, those who can use credit accounts responsibly may wonder how they will be able to build or maintain a credit score, especially with the new restrictions from the Credit CARD Act. Recently, Forbes put out some tips for younger people who are looking for ways to access credit.
One option recommended by the news organization is to have younger people put on their parent’s credit card accounts. Payments on the accounts made by their parents could help younger people build credit. However, if their parents are not responsible, it could end up hurting the child’s credit.
If the younger person seems responsible enough, an adult may consider cosigning for an account as the new regulations intend. However, adults have to be careful because they may end up liable for missed payments, which could end up hurting their credit score.
“Once a parent cosigns and money is owed on the account, the only way to eliminate the cosigner’s liability is to first pay off the balance due,” Forbes said.
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