As a Parent, How Can You Help Your Child Build Credit Score?

By CreJik.

May 22, 20255 min read
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Starting early helps your child become more responsible with credit, build a strong credit score, and shape a financial future where they can achieve dreams like owning a car or home—and enjoy true financial freedom on their own terms.

Parent helping their child build a credit score

Credit Scores Are the Foundation of Financial Trust:


A strong credit score unlocks better financial opportunities and long-term stability.
To learn how to build, maintain, and improve your credit score, read: The Credit Score Saga.

When Your Child is Below 18 (Minor):


As a parent, you can take the first step in your child's financial journey by opening a Child’s Savings Account with your existing bank — for instance, the HDFC Kids Savings Account. This allows you to formalize the pocket money you already give your child by transferring it directly into the kid’s account.

With this account, the child can use an ATM/Debit card or UPI (linked to the kids savings account) for small transactions, giving them real-world exposure to money management.

💡 Benefits of a Kids Savings Account:


  1. Parental Monitoring: As a legal guardian, you can track all transactions, keeping your child’s spending in check.
  2. ATM Withdrawal Limits: Set limits like ₹3,000/month to control physical cash usage.
  3. Debit Card Transaction Limits: Configure daily caps (e.g., ₹10,000) so your child can make essential purchases — books, learning tools, project supplies — independently.
  4. Early Financial Discipline: This account fosters budgeting, savings, and spending awareness from a young age.

🔒 Note: As per RBI regulations, individuals must be at least 18 years old to access any form of credit. This means credit cards cannot be issued to minors, even against Fixed Deposits.

When Your Child Turns 18 (Adult):


Once your child turns 18, they become legally eligible to enter financial contracts. This opens the door to real credit-building opportunities.

As a responsible parent, you can:

  • Help your child get a PAN card.
  • Guide them in opening their own savings account.
  • Assist in creating a Fixed Deposit (FD) in their name.

From here, many banks offer secured credit cards against FDs — typically with 90% to 100% of the FD amount as the credit limit.

🏦 Why an FD-Backed Credit Card?


  1. Start Small: Begin with an FD of ₹10,000–₹25,000. This keeps spending in check while building a credit history.
  2. Low Risk, High Reward: Your child earns interest (6–9%) on the FD while using the secured credit card.
  3. Financial Education Opportunity: Teach your child how timely payments impact credit scores positively.
  4. Avoiding Debt Traps: Explain the dangers of only paying the “Minimum Amount Due” — a lesson in avoiding long-term debt.
  5. Long-Term Benefits: A good credit score means lower interest rates when applying for loans — for education, cars, or homes — in the future.

Conclusion:


  1. Start Early: A Kids Savings Account is a great way to introduce money management skills.
  2. Make It Real: Use storytelling — your own experiences with credit scores — to connect and teach.
  3. Use FD-backed Credit Cards Wisely: They're the safest entry point into the credit ecosystem.

Building a credit score early in your child’s life teaches them to be smart with both money and credit. It empowers them to live a debt-free life and to make confident financial choices.


As a Parent, How Can You Help Your Child Build Credit Score?

Final Thought:


Being a responsible parent today means shaping a financially strong tomorrow for your child — and your entire family. The habits you help your child build now are the foundation of their financial independence and peace of mind.

📢 Stay Tuned for More!


Enjoyed this blog? Stay tuned for more tips and strategies to help you build your child's financial foundation—because teaching smart money habits today paves the way for their secure and independent future tomorrow.

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