7 Genius Ways to Help Your Teen Build a Credit Score

Seeing your kids grow into teenagers and parenting them during this new phase in their life can be challenging. You want them to succeed in every area of their life and learn how to make sound decisions, especially concerning their finances. 

One essential component to achieving financial success is building a good credit score. This is important because credit influences many major life decisions, like getting a mortgage or car loan. That said, it’s vital for young people to learn about managing credit in addition to establishing credit early and consistently.

A healthy credit score can make your teen’s transition into adulthood much easier and better equip them to face the real world and its many financial demands. This guide lists the top seven ways you can help your teenager build credit, develop good spending habits, and create a solid financial foundation for their future.

How to Help Your Teenager Build Credit 

Building a good credit score can sound intimidating, especially for a teen. But with proper guidance and education, it’s highly possible. You can start by following the tips below. 

Give Them a Prepaid Card

Before opening a credit card for your teen, consider giving them a prepaid card first. This will teach them to make purchases independently, create their own budget, and control their spending. 

Prepaid cards come with fees and have no bearing on building your teen’s credit history, so make sure to use them for a limited time until your child develops good financial habits. 

If you have younger teens still in high school, getting them a prepaid card to practice with is an excellent way to teach them how to be financially responsible before they enter college. 

Help Them Save for a Credit Card 

If your child is 18 and ready to start building their credit score, it might be time to assist them to get a credit card for students. Unless your child already has employment income, you’ll need to cosign the application.  

Once your child has the credit card in hand, teach them about maintaining excellent credit which they can achieve by: 

  • Making payments on time, 
  • Using their card only for the things they can afford, and 
  • Keeping their credit card utilization low. 

Help them understand that their credit score will take a hit if they fail to pay their minimum payment on time, so it’s best to pay before or on the due date. 

Your teen should also know that their credit score significantly impacts their ability to get a cell phone plan or acquire assets, such as a mortgage to invest in real estate. Showing them real-life examples will keep their interest and help them realize that credit really does apply to them. 

Add Them as an Authorized User

If your teen is under 18, adding them as authorized users of your card is a great way to help them build their credit score before they come of age. 

Generally, your child must only be at least 13 to 15 years old to qualify as an authorized user. However, some card issuers have no minimum age requirement, so check the minimum ages of your card issuer.

Before adding your child to your card, call your issuer to confirm whether their activity will be reported to the credit bureaus. If not, it will not help your teen establish a credit history.

Once you’ve added your teen as an authorized user, they can use your card for online and in-store purchases. They may also gain access to the same benefits that you have, such as airport lounge access.

Teach Them to Monitor Credit History

Whether your teen has their own credit card or is added as an authorized user, it’s essential that they learn how to monitor their credit scores. 

Remind them to check their credit reports regularly so they know what their credit profile looks like. This way, they know what to expect and avoid surprises when filling out loan applications or getting themselves a supplementary credit card. 

Open a Checking Account for Them

If your teen is a student, take advantage of the “student accounts” offered by most banks and credit unions and open one for your child. The great thing about these special accounts is that they require lesser fees than the regular ones. 

Opening a checking account is a great way for them to practice budgeting and familiarize themselves with bank processes. 

Once you’re confident that your teen can manage their funds independently, you can add a debit card later for easy withdrawal. 

Co-sign a Loan or Lease with Them

This strategy may come with risks to your personal credit score, so only do this if you believe your teen is trustworthy enough.

Allowing your child to make payments for a car loan, for instance, can be a good way for them to establish credit if they have no credit card of their own. 

You can also be a co-signer when your teen needs to be approved for their first apartment lease. In some cases, they can ask their landlord to report their rent payments to a credit bureau to help raise their credit score. 

Any other kind of installment loan, like auto or student loans, can also boost your child’s credit mix.

Before co-signing a loan with your teen, check if local state laws allow children below 18 to co-sign one. You should also ask your lender when each loan will appear on a credit card report.

Have Them Report All Possible Forms of Credit

Fifteen percent of an individual’s credit score has to do with the amount of time they’ve been a borrower and their financial history, which is why it’s more difficult for a teen to establish credit. Luckily, there’s a workaround for this. 

Once your teen turns 18, have them open an internet, cell phone, or utility account under their name and sign up to have their payments reported to the credit bureaus.

On-time payments will be added to your teen’s credit report and significantly help them build a good credit score. 

The Takeaway

For teenagers, it’s important to start building credit early. This will help them get the best loan rates and acquire necessary assets when they finally become adults. 

Your teen may make mistakes throughout their financial journey, but you helping them learn the ropes will fast-track their way to building a good credit score.


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