How do I get my infant on the course to great credit?

[00:00:00] Ralph Estep, Jr.: I got a fun show set up for today. And the question we're going to answer today is pretty simple and that's how do I set up my newborn, you heard me right, my newborn for financial success? Imagine giving your child a gift of excellent credit before they can even walk. Sounds impossible, right? No, Ralph hasn't lost his mind on this wacky Wednesday show. Well today, I'm going to show you how it's not only possible, but I'm going to argue it's crucial to do this in this modern financial landscape. And you won't believe this shocking story I'm about to share about identity theft of an infant. So stay tuned on how to protect and build your child's credit from day one as I answer the question, how do I get my infant on the course to great credit?

[00:00:48] Ralph Estep, Jr.: Well, let's start by taking a look at yesterday's show yesterday, we demystified VPNs or virtual private network. We talked about why they're valuable and why you definitely want to use one if you're using any kind of public Wi-Fi, and if you missed yesterday's episode or any of our episodes, you could go right to askralph.com and you will find our whole catalog of episodes out there. You can even search on a topic and see what I've talked about in the past.

[00:01:16] Ralph Estep, Jr.: Well, let's start with our listener question. This one comes to us from Sandy. She sent in this question.

[00:01:21] Ralph Estep, Jr.: "Dear Ralph, my husband and I just welcomed our first child last month. We are over the moon, but we're also overwhelmed thinking about his future. A friend mentioned something about building our baby's credit early. Is that even possible? I'm still shocked that we had to get our son enrolled in daycare a full six months before he was even born but now, we've got to be worried about his credit? As if these diaper changes and feedings weren't enough. So Ralph, is this really a thing? And how do we go about doing it? We want to give him every advantage in life, including a strong financial foundation. Thanks for your guidance."

[00:01:56] Ralph Estep, Jr.: We'll Sandy, all I'm going to say is yes, it's a thing. And congratulations on your new bundle of joy. I am sure you are up to your ears with diaper changes and feedings and all that stuff, but your question truly is incredibly timely and it's important.

[00:02:12] Ralph Estep, Jr.: So on today's episode, I'm going to tell you all the things you need to do as a new parent, who might be wondering the same thing of how you get your kids on the right path to good credit. And before we get started, I want to remind you. Just like this question we got this morning; this show is all about answering your question.

[00:02:28] Ralph Estep, Jr.: That's why I call it Ask Ralph. So keep those questions coming. It's really two ways to get those questions to me. You can send me an email. My email address is ralph@askralph.com or you can also visit our website and click on the microphone icon. Our website address is askralph.com.

[00:02:47] Ralph Estep, Jr.: Well, I am thrilled you're joining me today. You're trusting me to guide you through this complex world of finance from a Christian perspective, it means the world to me, and it humbles me. I also want to remind you, as I just mentioned, to visit our website. I want you to join our community and by joining our community, I'm going to send you a copy of my book.

[00:03:03] Ralph Estep, Jr.: This is it right here. It's called Mastering your Finances. Now, if you were to buy this on Amazon, it would cost you 10 bucks, but it's my gift to you just by joining our community. So go check that out.

[00:03:16] Ralph Estep, Jr.: I always like to start us in scripture. We're going to ground ourselves in scripture. We're going to look at the book of Proverbs 22:6, and it says this. "Train up a child in a way he should go; even when he is old, he will not depart from it." And see that is a perfect verse for today because the truth is, it's not just about spiritual training, but it's also about financial training.

[00:03:39] Ralph Estep, Jr.: We want to train our children for financial success and unfortunately, in my humble opinion, we do a very bad job of that in America. It is a major area for struggle so the sooner we can get our kids started on that path to financial success, the better. So let's dive right into it. And we're going to answer that question.

[00:03:57] Ralph Estep, Jr.: How can we set our children up for financial success from the very beginning?

[00:04:04] Ralph Estep, Jr.: Well, let me paint a picture for you. Picture this. You're holding your newborn child. You're marveling at those tiny fingers and toes and that baby smell. I can still remember that. And my kids are 23 and 27. You're thinking about, you're dreaming about all the possibilities that their future holds. And imagine this. In just 18 years, this precious bundle could be entering adulthood with a credit score that opens doors to opportunities that you never had. Does this sound too good to be true? It's not too good to be true.

[00:04:34] Ralph Estep, Jr.: it's possible, but it's also crucial. Like I talked about a minute ago in today's financial landscape. So let's talk about my friend, Harry. Harry and I have known each other for a long time. And a few years ago, they welcomed their first child. A little baby girl named Emma. and Harry was bursting with excitement.

[00:04:52] Ralph Estep, Jr.: Him and his wife were so excited about this baby. They had planned this for a month. They got everything set up, you know, they got the room set up and all the furniture put together, and the baby was born. He went through all that and he started to get into the normal routines. And he asked me one day. He said, Ralph, what can we do now to make sure Emma has great credit when she grows up?

[00:05:11] Ralph Estep, Jr.: Now you might be thinking, Ralph that's out from left field. And to be honest with you, I was never asked that before, but it was really a great thought-provoking question. And it really makes sense in this digital age. The truth is our credit affects everything. It affects renting an apartment, getting a job, buying a car, even your jobs.

[00:05:29] Ralph Estep, Jr.: I've talked about that in other episodes. So by starting early, Harry and his wife could give Emma significant head start in life. Well, before I get into the specific advice that I gave Harry, I want to share a cautionary tale. This is a story that still sends chills down my spine and underscores why protecting your child's financial identity is just as important as building their credit. Let me tell you about my mom. A few years back and I'm going to say it's probably 15 years ago, my mom was called to serve on a jury. Now, my mom had never been on a jury before, you know, a lot of people don't like that whole thing.

[00:06:01] Ralph Estep, Jr.: And to get that jury notice, you got to go in, but she got you know, asked to be on a jury. And I think she did everything she could to get off of it. The case was this. There was a criminal ring and what they were doing was they were working with people who were involved in the birth process. And social security and all these things, and what they were doing is they were actually stealing infant's identity. Yes infants.

[00:06:24] Ralph Estep, Jr.: And they were open up fraudulent accounts on these children. They would obtain their birth records, their social security numbers, and all their other personal information on their newborns. And they would open up bank accounts. And they'd use this clean slate because the kid or the kid didn't have any other credit. They would open up credit cards.

[00:06:41] Ralph Estep, Jr.: They'd take out loans and some even bought houses. All under the names of these innocent babies and here's the problem. The victims aren't going to discover this fraud until years later when they apply for their first credit card or student loan. And then they're going to get that surprise, you know, their credit is in shambles before they even used it.

[00:07:00] Ralph Estep, Jr.: It was a nightmare scenario that ruined the financial futures of countless young adults. And I am happy to say that from what I understand, my mother found those people guilty, and they went to jail, which they should, because that's a horrible thing. But what did this teach us? This was a wake-up call. It taught me that protecting the child's credit

[00:07:19] Ralph Estep, Jr.: isn't just about building it up, but it's also about safeguarding it from the very start. So what did I tell Harry? I started that discussion with you. I want to tell you the rest of the story. So I told him here's what you can do to protect and build your child's credit. The first thing we're going to talk about is protection. This one is an absolute must do.

[00:07:38] Ralph Estep, Jr.: And that is you got to freeze your child's credit. This is the first line of defense. What you want to do is you want to contact all three major credit bureaus: That's Equifax, Experian, and TransUnion, and request a credit freeze for your child. Well, you might be asking Ralph, what does that do? Well, that credit freeze prevents anyone from opening new accounts in your child's name.

[00:07:59] Ralph Estep, Jr.: It's the first line of defense. They're not going to be able to open an account in your child's name. The second thing you want to do is you want to guard that social security number. You've got to be extremely cautious about sharing your child's social security number. Listen, here's what I'm going to tell you to do, only provide it when it's absolutely necessary.

[00:08:17] Ralph Estep, Jr.: And always ask this question. Why is it needed? And how will it be protected? And that goes for not just children, but that goes for us as well. If somebody is requesting your social security number, it is very fair to ask them number one, why is that needed and how is it going to be protected? Because you can potentially prevent fraud by guarding that social security number. Number three third thing you must do. You've got to keep important documents secure.

[00:08:44] Ralph Estep, Jr.: This is what I talked about in a show a couple of weeks ago, about those important documents story, your child's birth certificate, that social security card and all those other important documents in a safe place that looks like a locked file cabinet or safe deposit box. Again, I talked about these important documents to keep on the show a few weeks ago, and I'll put a link to that show in the show notes stay.

[00:09:05] Ralph Estep, Jr.: So go check it out. Next thing you want to do? Number four. You've got to monitor your child's credit report. Now you might be thinking, Ralph, you've lost your mind. This is an infant. This is a toddler. You know, I'm not saying that they should have a credit report, but it's a good idea to check it periodically.

[00:09:23] Ralph Estep, Jr.: And if a report exists, it could be sign of fraud of you pull your child's credit and it has nothing on it. Thumbs up. That's a good thing. That means no one has opened any fraudulent accounts. But if you pull it and they have credit. You know, I don't think they were in the crib, like, you know, dial an 800 number to get credit cards.

[00:09:41] Ralph Estep, Jr.: So you kind of wonder it probably fraud. Most definitely fraud. Well, let's talk about building credit. We talked a little bit about safeguarding it, but now as the child gets a little bit older, let's talk about building that credit. One of the ways you can do that. As you can add your child as an authorized user.

[00:09:58] Ralph Estep, Jr.: Now you normally need to wait. Until they're old enough, like 13 to 16 years old. And it really depends on the credit card company. Some credit card companies won't do it at all, but one of the things you can do is abdomen an authorized user on your credit card. What does this do? Well, it allows them to benefit from your good credit habits now. This goes without saying. If you've got bad credit do not add your children to your credit.

[00:10:21] Ralph Estep, Jr.: You know, you've got to fix it, which leads me to the second thing. And that is teach financial responsibility early. One of the things that when I was a kid, my mom and dad bought me a piggy bank. You don't see those too much anymore, but I think that is a great place to start. Start with that piggy bank, then graduate to a savings account. This is going to teach them about budgeting.

[00:10:40] Ralph Estep, Jr.: It'll teach them about saving and the responsible use of money. The next thing you might want to consider is to help them open a student credit card when they're 18 and heading to college, help them, help them apply for that student credit card and get a really low limit. Guide them in using it responsibly and in paying in each month. You know, one of the things my dad did, I can still remember the day we were at the Christiana mall here in Newark, Delaware.

[00:11:02] Ralph Estep, Jr.: We're walking through the mall and my dad looks over at me and I probably was 17, maybe 18 years old. He said, hey son, do you have a credit card? I'm like, dad, no. And he goes, well, let's go into the store, JC Penny's here and we'll open up a credit account for you. And I was like, well, that's pretty cool.

[00:11:17] Ralph Estep, Jr.: Right? So we went in, we got filled out the application, you know, they submitted it. And about five minutes later, say you've been approved. And I said, that is fantastic. And they said, yes, you've been approved for a $200 credit limit. I look at my dad and I say, wow. 200 bucks. Well, that's something.

[00:11:33] Ralph Estep, Jr.: And he says, here's what I want you to do though. Sonny says, I want you to go into the store when you get your credit card, I want you to buy things, things that you need, obviously. And he said that at the end of the month, here's what you absolutely got to do. You've got to pay that balance in full.

[00:11:46] Ralph Estep, Jr.: And my dad was teaching me a lesson about how to get started. Another thing you can consider doing is co-signing a loan. I've talked about this on the show. So I say, you got to be careful with this, but consider cosigning a small loan with their child when they're old enough. You know, this might be a car loan or something to build their credit, but remember this, and you've got to remember this. You are going to be equally responsible for the payment.

[00:12:07] Ralph Estep, Jr.: So make sure you're doing the right thing. Another thing that I highly recommend is that's encourages your children to get a part-time job. You might say, Ralph, why do you do that? Well, it teaches them work ethic. But it also provides them with income to manage income, to save a potentially a way to use and build credit.

[00:12:25] Ralph Estep, Jr.: Now you might be wondering Ralph, isn't it too early to think about credit for a baby. You probably think Ralph has lost his mind. Wacky Wednesday has gone to his head. He's really talking about credit for babies. And I understand that concern, but here's the thing you've got to understand. If you listen to my show, I hope you're getting this financial education is a lifelong process.

[00:12:46] Ralph Estep, Jr.: It doesn't just happen at one point in time. If you're starting early, you're not just building credit, but you're instilling values and habits that will serve your child right throughout their life. Those lessons that you teach them when they're very young, how to use that piggy bank, how to use that, we call it a passbook savings account.

[00:13:05] Ralph Estep, Jr.: When I was a kid, there was a little book, and you'd go to the bank, and they'd write in there. How much your deposit was. And they send it on their way up there. They stamped it. And you could go look at that and say, look at this as growing. So it is a process that instills those habits and values. And remember what?

[00:13:18] Ralph Estep, Jr.: Proverbs 22 verse six tells us train up a child in a way he should go. So even when he is old, he will not depart from it. This is precisely what I'm talking about. It pertains to financial wisdom and teaching your children about responsible financial management from an early age, you're setting them up for a lifetime of good decisions.

[00:13:41] Ralph Estep, Jr.: So, yes. The answer really is you can help your kid, your infant establishes good credit. And when I shared the strategy with Harry, he was relieved and energized. You know, it was like a burden had been lifted. He realized that protecting and building Emma's credit wasn't just about numbers on a credit report.

[00:13:58] Ralph Estep, Jr.: It was about giving her the tools and knowledge to navigate the financial world confidently. So what did Harry and his wife do? Here's what they did. They immediately took action. If you listen to me, you know, I say this. You can have all kinds of great intentions, but they are absolutely useless unless you do something.

[00:14:15] Ralph Estep, Jr.: Take action. So that's what Harry and his wife did. He took action, they froze Emma's credit report. They set up a small savings account in her name and committed to teaching her about money. As she grows, one of the things they made, thing that they had to do. And this is something that my, a lady that does some massage therapy for me does. Whenever her son gets any money like birthday, Christmas, or whatever.

[00:14:35] Ralph Estep, Jr.: She makes him put half of that right away into a savings account. Now he can use the other money for fun money or spending, but she's teaching that from an early age to pay yourself first, put that savings. First. The other thing that Harry and his wife did was he started building, you know, a credit building fund.

[00:14:53] Ralph Estep, Jr.: They set aside a small amount of money each month to potential use for a secure credit card or as collateral for a small loan. When Emma is older, they started that process. They started building that foundation. But perhaps the most powerful thing Harry and his wife did. And this is something I'm going to stress that you need to do also is they looked at their own financial habits.

[00:15:13] Ralph Estep, Jr.: They realized the best way to teach Emma about good credit was to model it themselves. They started paying more attention to their credit scores. They made sure that their bills were paid on time. They were being more mindful of their credit utilization, and it was so cool to watch this from the outside.

[00:15:29] Ralph Estep, Jr.: I watched Harry and his family embark on his journey. And it reminded me. That is the transformative power of financial education. It's not just about numbers. True. Financial transformation will lead to freedom. It leads to opportunities. And more importantly than any of that, it leads to peace of mind.

[00:15:49] Ralph Estep, Jr.: And by starting early, Harry and his wife were giving Emma more than just a good credit score. They were truly building a foundation for a life of financial wisdom and stability. So to all you parents out there, whether you have a newborn, a toddler, or even a teenager, remember this. It is never too early to start thinking about your child's financial future. You have got to start by protecting their identity. Teach them good habits and the most important thing lead by example, you've got the power to shape, not just their credit score, but their entire financial future. And for those, you might be thinking, I wish someone had done that for me when I was younger.

[00:16:25] Ralph Estep, Jr.: Remember. It's never too late to start. The principles we discussed today apply to adults too. You can start rebuilding or improving your credit and your finances right now today. In the end, what Harry did for Emma wasn't just about credit. It was truly an act of love. It was a way of caring for her future self. And isn't that all what we want to do for our children.

[00:16:48] Ralph Estep, Jr.: We want to give them every possible advantage in life. So let's recap to protect and build your child's credit. What are the things I said to do is freeze that credit report guard, their personal information, consider adding them as an authorized user when appropriate, teach them financial responsibility from a young age, help them open their first credit account when they're ready.

[00:17:08] Ralph Estep, Jr.: And most importantly, if you don't listen to anything else I've said today, model good financial habits yourself. Remember. This building good credit is a marathon. It's not a sprint. If you listen to me, you know, I always say it's all about the journey. So start early, stay consistent and watch as your child grows into a financially savvy adult.

[00:17:30] Ralph Estep, Jr.: Well thank you for tuning in today. I want to talk to you about tomorrow show. Tomorrow's our Tax Talk Thursday and we're going to be talking about eight common reasons for getting audited by the IRS. Yes, that's going to be a fun show that you don't want to miss it. So make sure you catch us tomorrow and listen, I know I've dropped a lot today and a lot of times people will call me or though they'll send me an email they'll say Ralph. I'm overwhelmed.

[00:17:53] Ralph Estep, Jr.: I don't even know where to start. I can help you if you want personalized guidance. On how to manage your finances and set your children up for success. I am here to help. If you need help with a business or you want to grow your business, you need help with your accounting for your business. I can help you with all those things.

[00:18:10] Ralph Estep, Jr.: And it starts by just paying me $150 for an appointment. I call it a consultation. You can do that at askralphpodcast.com/store. I will create a customized plan to improve your personal finances. Maybe you need me to help you boost your business and help you achieve all those financial goals. So all I'm going to say is right now, don't wait, take the first step towards financial freedom today and schedule that appointment right now.

[00:18:38] Ralph Estep, Jr.: Remember this, my passion is to help you achieve financial success. I want you to live out your dreams. I want you to grow in your faith. I know that. Together, we can master your finances from a Christian perspective. So as I always close stay financially savvy, and God bless you.