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Good Credit & Even Better Values

Good Credit & Even Better Values: What You Need To Know To Set Your Kids Up For Financial Success

by Charles Satterfield | Staff Writer

As they regularly remind us, teens know everything. Money is no exception. In a recent national poll, 87% of 12 to 17 year olds reported knowing at least an average amount about managing finances. That study also found that 24% of them think a debit card is used to borrow cash. Another poll found that fewer than one-third of teens understand how credit card interest works and four in ten can’t budget. So the next question is, are parents contributing to their kids’ gap in knowledge by starting and ending money discussions with the question, “How much do you need?”

“The more you teach your kids before they go off on their own, the better prepared they are,” says Chuck Cowell, CEO of Preston State Bank. Here are his thoughts on why the most critical skill you can teach kids is to build a strong credit profile.


Q: What is a credit profile?

A: A credit profile is a document which provides information about someone’s credit history. Credit profiles are used by lenders and other agencies to determine someone’s creditworthiness. A good credit profile will make it easier for someone to access credit, and a bad credit profile can become a major stumbling block. One’s credit profile is something that is carried with them throughout their life (not to be confused with a credit score, which is a snapshot of one’s profile at a given moment).


Q: Why is a credit profile important?

A: Your credit profile is your financial reputation. Each time you borrow, you build a credit history or a financial track record.


Q: How can parents benefit from your expertise?

A: Most parents raising teenagers are so busy with the day-to-day challenges of work and family, they don’t fast forward to when their kids will have graduated college and need a good credit profile when renting an apartment, obtaining a car loan or qualifying for lower rate credit cards. Employers often look to one’s credit profile when evaluating job candidates. We consider it our privilege to help parents and their kids by showing them the value of projecting ahead.


Q: How do we get started?

A: Just give us a call and schedule a time to come in and apply for a loan in the child’s name.   For example, if your teen will be working over the summer, he or she will present their projected summer earnings and a budget and then borrow a percentage of their projected summer earnings. Some proceeds are invested in CDs maturing at Christmas, some for spring break or prom, and the rest is invested until the next summer. A payment schedule is established, teaching basic finance concepts of budgeting, planning expenses, paying debts and realizing benefits of longer term savings. This loan is reported to the credit bureau, establishing the child’s credit profile. Doing this over a couple of summers unquestionably helps develop good habits, but also a strong credit profile.


“We are focused on building a long-term relationship with you and your children. We will help you teach your child how to present an income statement, budget, and schedule of repayment so they can build a strong credit profile to take them into their future.”

– Chuck Cowell, CEO, Preston State Bank


For more info on banking, go to prestonstatebank.com or email info@prestonstatebank.com




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