The best way to help your kid build credit is to teach them early on. Whether they are in elementary school or getting ready to move out, learning these skills before they become adults can help them build good credit and make sure they have enough money when they need it. There are some simple steps you can take to support them in that goal. Parents can begin building their childs credit by following these five tips.
Minor children typically dont have credit reports and credit scores. (If they do, thats a red flag for potential identity fraud. ) But you dont have to wait for them to come of age to start teaching them about money. The sooner they become familiar with financial basics, the better prepared theyll be to manage their own money. Below are some jumping-off points:
You can also check with Equifax, Experian, and TransUnion to see if your child has a credit report. If they doâand you discover fraudulent information within itâyou have the right to dispute it and also have the right to freeze their credit to prevent further damage.
Establishing good credit is an important part of financial health. With good credit, your child will have more options for loans, credit cards, mortgages and even renting an apartment. The good news is that you can start building your child’s credit long before they turn 18 years old. This article will provide parents with tips and strategies to help their kids establish credit history and positive financial habits from a young age.
When Can You Start Building Your Child’s Credit?
The ideal age to begin developing your child’s credit is between 13 and 15 years old. Here are some key things to know about the minimum age requirements:
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Children typically don’t have a credit report until age 18 unless they are authorized users on a parent’s credit card
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Most credit bureaus let you request a manual credit report search for children under 13 This checks for any fraudulent accounts opened in the child’s name
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Kids of any age can be added as authorized users on a parent’s credit card. This lets them take over the payments history,
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Kids can start building their own credit history when they turn 18. They can apply for student credit cards, secured cards, and loans.
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To get a regular credit card without showing proof of income, you must be at least 21 years old. If they make enough money, a 18–20-year-old might be able to qualify.
Credit bureaus have age limits on who can get their credit checked, but kids as young as two can start learning good money habits. You can help your child build good credit by teaching them how to handle money early on.
5 Ways to Help Your Child Build Credit
Here are the top recommended strategies parents can use to help establish their child’s credit history:
1. Add your child as an authorized user on your credit card
Adding your child as an authorized user allows them to benefit from the primary cardholder’s payment history. As you make on-time payments, it helps build positive credit for any authorized users aged 18 and over.
For children under 18, you’ll want to verify that your card issuer reports authorized user activity to the credit bureaus. Capital One is one major issuer that reports for authorized users of all ages.
2. Open a joint savings or checking account
Joint bank accounts allow teenagers to practice money management in a low-risk environment. Look for student checking accounts or teen savings accounts at banks like Chase and Capital One. Managing a joint account responsibly can help demonstrate financial readiness for future credit.
3. Help them get a secured credit card at 18
Secured credit cards require a refundable deposit that serves as the credit limit. They help young adults build credit through responsible use. Look for options like the Discover it® Secured Credit Card that provides cash back rewards.
4. Add your teenager as an authorized user on a student credit card
Student credit cards offered by issuers like Discover and Capital One are designed for consumers new to credit. Adding your college-aged child as an authorized user can give an extra boost to their independent credit history.
5. Co-sign a credit card or loan at 18
If your teenager has proven responsible enough, co-signing a loan or credit card can help them establish primary account history. Just be sure you’re ready to take responsibility for repayment if needed.
Establishing Healthy Credit Habits Early On
Building credit doesn’t have to wait until your kids are teenagers or young adults. You can start instilling positive financial habits at a young age:
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Give an allowance: Let younger kids practice earning and budgeting a small amount of money each week.
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Open a savings account: Have them save toward goals like a new bicycle or video game.
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Use debit cards: Get teens a checking account and debit card to track spending.
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Explain credit vs. debit: Make sure kids know debit cards deduct real money while credit is a loan.
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Discuss credit scores: Teach older teens how scores work and how to maintain great credit.
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Review credit reports: Order reports together once they turn 18 to ensure accuracy.
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Set spending limits: Agree on appropriate limits for authorized user or joint credit accounts.
Laying this early groundwork makes your child more likely to use credit wisely down the road.
Options to Build Credit for 18-21 Year Olds
Once your child turns 18, there are more credit-building options to consider:
Student Credit Cards
Student cards tend to have lower credit requirements and smaller limits. They help young adults learn responsible credit habits. Student rewards cards like the Discover it® Student Chrome offer cash back incentives.
Secured Credit Cards
Secured cards require a refundable deposit that becomes the credit limit. They help consumers with limited credit history build a positive payment record. The Discover it® Secured Credit Card is a strong option that provides cash back rewards.
Credit-Builder Loans
These loans place the borrowed money into a savings account as collateral. By repaying the loan successfully, you can establish on-time payment history. They often have high interest rates, so compare options carefully.
Co-Signed Credit Cards
If your college-age child has proven responsible enough, co-signing a card as the primary account holder can help them build independent credit history. Educate them on consequences of missed payments.
Authorized User Accounts
Staying on a parent’s credit card as an authorized user after age 18 can provide an ongoing boost to your child’s credit, allowing them to inherit your good history.
Monitoring Your Child’s Credit Records
To protect your child against identity theft and ensure accurate credit records, it’s important to monitor their credit reports. Here’s how:
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Order free annual credit reports for children over age 13 at www.AnnualCreditReport.com.
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For children under 13, contact each credit bureau to request a manual search for any credit records.
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Starting at age 16, check your child’s credit reports regularly to watch for issues.
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Use credit monitoring services like CreditWise from Capital One to track credit information once your child turns 18.
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Act quickly to dispute any unknown or fraudulent accounts with the credit bureaus.
Monitoring credit reports allows you to watch for problems and help educate your child on how to maintain healthy credit.
Let Their Credit Journey Begin
Establishing credit doesn’t have to be intimidating. As a parent, you have many options to help your child gain positive credit history, both early and into adulthood. Maintaining open communication about financial responsibility is key.
With an authorized card, student credit account or secured card, your teenage and young adult children can start building trustworthy credit habits. By starting early and monitoring progress, you can set your kids up to establish strong credit history and financial skills they’ll use for life.
Add Your Child as an Authorized User on Your Credit Card
In most cases, you have to be 18 to open your own credit card. One workaround is to add your child as an authorized user on one of your accounts. Many credit card companies don’t set a minimum age, but some do. They may need to be at least 13 years old. As an authorized user, theyll receive a credit card in their name thats linked to your account. This will allow them to make purchases, but they arent responsible for repayment.
Being an authorized user will also establish a credit report for your child (though some card issuers wont report authorized-user accounts until age 18). Paying your bill on time and keeping your credit utilization ratio low can help build your childs credit. You can also teach good credit habits by having them reimburse you for all their charges.
Teach Your Kids How Credit Works
Your child should know how to handle their credit by the time they are a young adult. In that spirit, here are some lessons you can teach them about core credit at every age:
- Teach them the basics of money, like how to tell the difference between coins.
- Show them how to save money by giving them a piggy bank.
- Show them how important money is by letting them help you buy things.
- Go over how a debit card works.
- Explain what debt is and how credit is not the same as debit.
- Play personal finance games together that reinforce different financial skills.
- Show them how a credit card works.
- Explain how to use a credit card responsibly.
- Offer to lend them the money they need to buy a big-ticket item, but charge them interest. It’s better for them to save for the purchase themselves than to be in debt to you. If they can’t pay you back, tell them to get a part-time job or do more chores around the house to get more money.
Building Credit For Your Kids
FAQ
At what age can you start building your child’s credit?
You can start building your child’s credit by adding them as an authorized user on one of your credit cards, typically as young as 13. Some credit card companies may have an age limit (like 13 or 18) for people who are allowed to use their cards, but others don’t.
Can I build my child’s credit by adding them to my credit card?
Yes, adding children as authorized users can help their credit scores. It’s the main cardholder’s job to keep their credit score high so that authorized users can benefit.
Can parents build their child’s credit score?
As a parent, there are lots of ways to help your child establish and build credit. Adding them as an authorized user on your credit card account could be one. There are also secured credit cards and student credit cards that they can get after they turn 18 or 21.
Can I open a credit line for my child?
Because people under age 18 can’t open their own credit cards, you can’t technically open a new credit card account in your child’s name — but you can still add them to yours. Adding someone to your account turns them into an authorized user, which gives them many of the same perks you have as the primary cardholder.