As a parent, you want the best for your kids in everything they do, from school to work to home life. Learning how to build credit can be part of that. Good credit scores can give young adults access to good rates and terms on credit. It could even help them when applying for a job, an apartment or a cellphone plan.
It might seem hard to build credit as a teen, but it’s an important step toward being financially independent. When you build credit early on, it’s easier to get loans, credit cards, and other financial products later on. It also teaches you good money habits. There are some restrictions for teens under 18 years old, but there are still a lot of ways to start building up those valuable credit points.
Why Building Credit as a Teen Matters
When it comes to buying a car or getting an apartment, having good credit opens some doors. Credit reports are used by landlords, lenders, and even some employers to figure out how responsible a person is with money. Starting to build credit as a teen speeds up the process of building a good credit profile over time.
Your overall credit score is based on how long your credit history is. The longer you have credit, the better. Starting when you’re a teen gives you an edge on this important metric.
It also puts good habits in place Monitoring your credit report, making payments on time, and keeping balances low early on helps credit scores over the long run
Jobs Provide Income to Qualify for Credit
Without proof of income, the Credit CARD Act of 2009 makes it hard for people under 21 to get a credit card. If you have a part-time or summer job, you can show your paystubs to many credit card companies to get approved.
With regular income teens can apply for student credit cards secured cards, and even co-signed traditional credit cards in some cases. Building a work history also demonstrates financial responsibility to potential creditors.
Open a Checking Account
Banks and credit unions offer checking accounts for teens, often with parental oversight. Having a checking account establishes a relationship with a financial institution, teaches money management skills, and paved the way for debit card use.
While debit activity doesn’t build credit, it does provide payment experience that translates later when applying for credit cards. Checking accounts also allow direct deposit of paychecks.
Become an Authorized User
One of the easiest ways for teens to build credit is by becoming an authorized user on their parent’s credit card account. As an authorized user, the teen gets a card in their name linked to the primary cardholder’s account.
The account history, payments, credit limit, and other activity gets added to the teen’s credit report. As long as the primary user pays on time and keeps balances reasonable, the teen benefits from the positive credit history.
Apply for Student Credit Card
Student credit cards cater to those new to credit, including teens just starting their financial life. Issuers relax qualification requirements for student cards, sometimes approving applicants with no credit history.
Having a part-time job provides the income banks look for when approving applicants under 21. Making small initial charges and paying off balances promptly helps establish positive credit behaviors.
Explore Retail Store Cards
Department store credit cards offer easier approval for new credit users compared to traditional cards. Store cards tend to have lower credit limits and higher interest rates, reducing risk to issuers.
While not ideal for ongoing use, retail store cards allow teens to build initial credit, especially when combined with regular payments and low balances. The key is avoiding high utilization and paying off balances each month.
Become an Account Holder on Utilities
Having bills like utilities and cell phone service in a teen’s name establishes official accounts that get reported to credit bureaus. Even if parents pay the actual bill, having accounts under the teen’s name adds positive payment history and credit mix.
Programs like Experian Boost even allow linking utility accounts to credit reports to build credit based on payment history. These everyday bills that parents likely already pay can build their teen’s score.
Consider Secured Credit Cards
Secured cards require an upfront deposit that becomes the credit limit. The deposit protects the issuer if the account goes unpaid. Secured cards allow those with no credit to demonstrate responsible use. Many issuers report to credit bureaus, helping secured card users build credit.
The deposit money belongs to the cardholder, not the bank, provided payments are made on time. After establishing a positive history, banks often upgrade secured card users to a traditional unsecured card.
Explore Credit-Builder Loans
Credit-builder loans don’t actually loan money. The borrower makes payments into a savings account in their name. The payments get reported to credit bureaus as loan payments.
Once the scheduled monthly payments are complete, the money saved becomes available. Credit-builder loans allow teens to build payment history that appears on credit reports as a traditional installment loan would.
Have Parents Add Teens as Users
Adding teens as authorized users on credit cards gives the biggest credit boost when the primary user has excellent credit and payment behaviors. Even being added to a parent’s newer credit card improves a teen’s credit mix, history length, and overall score.
Before adding a teen, parents should confirm with issuers that authorized user activity gets reported to bureaus. Not all issuers report authorized user accounts. To provide a credit lift, the users must appear on credit reports.
Understand the Impact of Joint Loans
Becoming a joint borrower with a parent or other adult on a credit account makes both parties equally responsible for repayment. Joint accounts get added to both individuals’ credit reports and factor into each person’s credit score.
For teens with no income, co-signing a joint loan can build credit but also carries risk. Defaulting on joint accounts damages the credit for all borrowers involved. Parents should consider implications before making teens joint borrowers.
Regularly Check Credit Reports
Checking credit reports regularly allows teens to monitor their progress and quickly address any errors. AnnualCreditReport.com offers free weekly reports from all three major credit bureaus. Monitoring credit reports ensures accurate information and provides visibility into improving credit.
Building credit takes diligence and perseverance, but it’s a worthwhile endeavor for teens. Having good credit early in life sets up healthy financial habits that pay off for years to come. While it requires some planning, a variety of options exist for teens to start their credit journey.
Open checking and savings accounts in their name
Some people keep their spending money in a checking account and their short-term savings in a savings account. Learning how to use and manage both accounts might teach your teen skills that could apply to managing other financial accounts like credit cards and auto loans.
Once you think theyâre ready, you could check into opening a bank account for your teen. As the joint owner, you could help monitor and manage the account. But you can make sure theyâre able to have some control and get practice as well.
Consider a student or secured card for them
Your teen has to be at least 18 years old to open a credit card. If theyâre under 21, theyâll also have to prove they can independently make the minimum payments on the account.
If you think your teen is ready, you could take a look at a credit-building card like one of these:
- Credit cards for students: A student card is made for college students who don’t have much or any credit history. It may not have as much credit as a regular credit card. But it might have some good points, like the chance to win prizes.
- Secured credit cards: Secured cards require a deposit. The deposit is security, and it may help you get approved more quickly. Secured cards can also have benefits, such as the chance to earn rewards.
0 to 700 CREDIT SCORE at 18 | How to Build Your Credit
FAQ
How can a teen build credit early?
Glad you asked. There are three ways your teen can build their credit early: Opening a Family Cash Card through Greenlight. Family Cash Card is a credit card for parents and their teens. Teens can use their cards to build credit before 18.
How can I Help my Teen establish credit?
Helping your teen establish credit is just the start. Maintaining good credit requires responsible habits, which can take time to develop. But learning early might help them reach many future milestones. For next steps, you could add your teen as an authorized user on your credit card account.
How can a teen build a good credit score?
To build a good credit score, teens should make timely payments and limit debt. Parents and guardians can help prepare them by opening a checking account and modeling good financial habits. They can also help teens establish credit by sharing a credit card or funding a deposit for a secured credit card.
Should I add my teen to my credit card account?
This could help your teen build credit before they turn 18. Just add them as an authorized user to one of your credit cards. That’s if: The card is used responsibly. Responsible use could help your teen establish and build their credit history and contribute positively to yours.
Can my child start building credit as a teen?
In summary, your child can start building credit as a teen, so long as you allow them to be an authorized user on your credit card, your credit history is good, and that credit card issuer reports the information to the credit bureaus (for people of their age range).
When can a teen get a credit card?
That enables young adults to get a credit card at 18. Your teen can verify income using docs like: So, the youngest a person can get a credit card is 18, and in most cases, not until they are 21 years of age. Wondering how it is, then, that a young person can start building credit?.
How can I build credit as a teenager?
Tips for Building Credit as a TeenGet a Secured Credit Card. Take Out a Credit Builder Loan. Become an Authorized User on a Parent’s Credit Card. Make Payments on a Student Loan. Get a Gas Credit Card. Monitor Credit Reports. Open a Joint Credit Card or Loan With a Parent or Guardian. Get a Student Credit Card.
Can a 15 year old get a credit score?
Typically, only people over the age of 18 have a credit score — but it is possible for minors to have a credit report. A person under 18 can have a credit report if : Their identity was stolen and used to open one or more credit accounts. A credit agency erroneously created a credit profile in the minor’s name.
Is a 0 credit score possible?
First off, it’s important to understand that credit scores of zero do not exist. Both the VantageScore and FICO scoring methods range from 300 to 850, so the lowest your credit score can go is 300. Feb 18, 2025.
What credit score does a teenager start with?
There isn’t a set credit score that each person starts with. Instead, if you don’t have any credit history, you likely don’t have a score at all. Credit scores are calculated based on factors such as payment history, current debt, credit utilization, credit mix, credit age and new credit applications.