We’ve covered before how new credit laws mean tighter restrictions regarding who qualifies for a credit card, and how people with sterling credit scores could face higher fees under the new regulations. As it turns out, there’s another wrinkle in the law books that gives young people a truly bum deal.
Under the new law, if you’re under 21, you can’t get a credit card on your own anymore. If you want to get plastic, you need to prove you have a qualifying source of income or a parent, guardian, or of-age spouse willing to cosign for you.
The idea is to cut down on the amount of consumer debt that students accumulate during their time in college. But not everyone ages 18 to 21 is pursuing a degree or wants their parents to meddle in their financial affairs.
If you have parents with bad credit or financial habits, requiring them to cosign means you are letting them determine your credit score. Unscrupulous cosigners could ring up charges under their child’s name and in the eyes of the law, both parties are equally responsible for repaying the loan.
It also means that young people will face a delay before they can begin building their credit history — an essential component of qualifying for an apartment or car loan.
Unfortunately, despite lawmakers’ best intentions, it looks like these regulations will end up penalizing responsible and independent young adults.
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[...] Wall Street Journal had a useful article for parents on how to “train” their teens to start using credit cards wisely. The main goal is to teach youths to build a credit history without falling into [...]