Should I encourage son to get a credit card to build a credit rating for future mortgage application?

[JustRollWithIt]

I don't like to encourage a credit card, but if used wisely, should I encourage my son to apply for one with the sole purpose of helping to build a credit record for his first time mortgage? Or is this the wrong thing to do? He is 19, living with us at home, working full time, saving hard into a lifetime isa with the hope to buy a small flat in the next 1-2 years or so. He currently has nothing that would reflect on a credit record (ie he has paid his car insurance in full, no phone contract as this is still in my name from when his contract began). Is this the right thing or wrong thing to do to help get a mortgage eventually?

I did with mine but explained they needed to pay it off in full and how paying for things over £100 on it would give them extra protection if there was an issue.

Dc1 did this (bought his house last year).
You do need more than one thing in your name he was told). The broker he saw said use a credit card for your petrol only and pay off in full every month. Also had phone in his name for credit reasons. Told to close any unused bank accounts and don't apply for any credit for at least 6 months. The broker then said track your credit score and come back when it's higher.

We ran a letting agency and applicants were always surprised they had a poor credit rating saying proudly 'I don't use credit'. We had to explain that to get a rating you had to use and pay back otherwise providers have nothing to base their assessment on; you don't exist. So, yes a good plan as long as he understands it is for a serious purpose and not for mad purchases!

Yes. He should use it for some of his normal spending and pay it off in full every month by direct debit so he never forgets.

He should also make sure he never goes into overdraft. Whether or not it makes sense, banks see proper use of a credit card as a good thing, but use of an overdraft as bad.

While it may sound obvious, make sure he knows that it's not free money to spend and it must always be paid back on time (when people get into a mess with credit this is sometimes given as a reason, unbelievable as it may seem).

He should also get his own phone contract as soon as the one you're paying for reaches the minimum term.

You can both learn about credit cards from:

https://www.moneysavingexpert.com/credit-cards/how-do-credit-cards-work/

Credit cards are great tools to help with all sorts of things as long as they are used correctly. I would also encourage him to register to vote and start paying for his own contract. Small things can make a big difference

I did encourage credit cards - my kids got them at eighteen, used them sparingly and paid off each month, one now has a mortgage and both have a good credit history.

I also encouraged them to use them for consumer protection when they bought certain things.

I have never had a credit card and didn't need to have had one for a mortgage.

A credit card is also a good idea if he wants the protection e.g. booking a holiday. PP has a good suggestion of using it just for certain things he would pay for anyway. Definitely switch the phone contract to his name as soon as you can too.

I agree with this, never having had a credit card is not a badge of honour, they are great when used correctly, offering protections and possibly also a small amount of cash back or other benefits. I wanted my kids to see they are not to be avoided but properly managed to benefit them.

You can get a credit builder credit card - the credit limit is low, but the interest is high

Look for a 0% interest for purchase card and request a low credit limit
If he's approved for a high limit, just ask the lender to drop it down
Set up a direct debit to cover a full payment each month if your worried he'll run up a debt. And maybe suggest he uses it only to buy his petrol

Thank you everyone. Seems like the answer yes is the majority.

Have been told by 2 brokers and my mortgage company that you can get a good credit history via phone bills etc OR a credit card, but you don't HAVE to go the credit card route. Myself and at 3 least of my other friends bought houses without having ever used credit cards, but it sounds like it might be a good idea for your son if you think he is responsible? Or if he wanted a simpler route he could put his phone bill in his name.

I did with mine and he was able to get a mortgage aged 25. To be honest I actually opened the card in his name with his permission, and ran it for him (used it for small transactions and had a DD set up to pay it off in full). It made sure he didn't go off the rails with it, which can be a risk.
I also had him added to the water and gas&electric bills as he was still living at home, and the electoral roll. He got his first mobile contract aged 18.

My credit score is 989. I've never had a credit card. I pay my insurance and mobile phone bill monthly and that did the trick

I think a credit card is useful as part of learning financial awareness and responsibility.
Never used more than 75% of your availabile credit and set up a df to pay in full every month.