In a 2011 survey conducted by Capital One, 38 percent of graduating high school seniors indicated they were not ready to manage their own banking and personal finances. At this age, young people generally enter the adult world with a clean slate. They have no real debts except for maybe a student loan, with a clean credit report, free from any bad marks. In some cases, however, as surprising as it may sound, a 17-year-old may enter the adult world with marks on her credit report that impact her credit score.
Minor Teens and Credit
Banks, credit card companies and cell phone companies are the types of businesses with which people have credit accounts. If a 17-year-old walked into one of these businesses and requested a line of credit, as a general rule, the business would deny the 17-year-old minor. The business is aware that generally speaking, minors lack the legal capacity to sign a contract, and that the minor could get out of the contract if he wanted to do so. There do, however, exist some exceptions.
A 17-year-old minor may get a car loan, with a co-signer -- often one of the minor's parents. The 17-year-old then has her name on a loan contract, promising that she will abide by the terms of the loan agreement. If she and her co-signer fail to make regular payments, the car goes up for repossession. A repossession shows up on both the minor's and the parent's credit reports, as the two parties are equally responsible for the debt. The repossession may have a negative impact on the minor's credit score.
When a person under the age of 18 goes to the doctor, the physician's office may issue a financial responsibility form to the parent, which says something to the effect of "the adult who is responsible for this child is responsible for the bill." However, depending on the state where the 17-year-old minor lives, medical care may be considered a necessity, and the medical provider may be able to collect the debt from the minor if the provider can't secure payment from the parent. If neither the parent nor the 17-year-old pays the debt, it will be reported to the credit bureaus and may stay on the minor's credit report for 7.5 years, Credit.com reports.
At age 17, some minors are emancipated from their parents or legal guardians. In these cases, they are considered legal adults in some states. If an emancipated minor opens a credit account with a business, she will be held to the contract and if she does not make payments as she is supposed to, this would damage her credit score like any other adult.
A Capital One article published on Creditcards.com by Karen Price Mueller discusses a situation in which a 17-year old girl opened a store credit card using a false date of birth with the help of store workers. In this case, the 17-year-old may be responsible for this debt because at age 17, minors are old enough to understand the consequences of their actions. The minor can dispute the debt, but her efforts may be to no avail. If a minor opens an account using a false date of birth, then fails to make payments on the account, this will lower her credit score.
- MSN Money; 5 Things That Affect Your Credit; Deanna Templeton
- Experian: Minors' Credit
- Bills.com: Advice on Medical Debts Incurred by Minor
- Capital One New Release: As High School Graduates Open Their Gifts, Parents Have Key Opportunity to Talk Money Management
- Creditcard.com; Minor's Credit Card Contract Raises Legal, Ethical Questions; Karen Price Mueller
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