5 Ways Teens Can Start Building Credit Right Now

Here's how you can start establishing credit even before you're 18.

When it comes to building credit, most people start at a disadvantage. It takes credit to build credit, and with no substantial credit history, it’s difficult to qualify for the very credit cards or loans they need to start building credit. And if you’re under 18, you can’t even legally open a credit card in your own name.

Luckily, there are some credit building methods you can use while you’re still in high school — even before you turn 18. Here are a five ways high school students can start building good credit (plus some tips on how to maintain it). 

1. Get a Job 

OK, so getting a job doesn’t directly help you establish credit, but income is a key factor in qualifying for credit, and your job history, just like your credit history usually gets stronger with time. The more experience you have, the better your chances of getting a better, higher-paying job in the future, so get started early (without hurting your academics, of course).

The CARD Act of 2009 requires students and other young adults to demonstrate their ability to repay debt before they can open a credit card account. Having a job will help you do exactly that and strengthens your qualifications for getting a credit card when you’re old enough.

2. Get Added as an Authorized User 

When you’re under 18, one of your options is to get an adult to add you as an authorized user on one of their credit cards. As an authorized user, you can hold and/or use the adult’s credit card, but you won’t be the primary cardholder. The primary card user’s responsible card use can help boost your credit.

“As an authorized user [you] would be able to piggyback off of the more responsible person’s credit,” says Amber Berry, Certified Financial Education Instructor at Feel Good Finances. “Of course, this requires consent from the sponsoring adult because it is the card owner, not the authorized user who is ultimately responsible for making payments.”

This is only a good idea if you and the cardholder both trust each other to use or pay on the card responsibly. You’ll also want to make sure the card in question reports authorized users to the three major credit bureaus. (Still confused about what it means to be an authorized user? We’ve got a full explainer here.)   

3. Get a Secured Credit Card

If you’re already 18, another option for establishing a credit history from scratch is getting a secured credit card. Secured credit cards require a security deposit that dictates your line of credit — for instance, a security deposit of $300 would get you a $300 credit limit. Even though your card is tied to hard cash, you still use it for purchases and make monthly payments just like a normal credit card.

It’s much easier to qualify for a secured credit card, and responsible use will still help you build credit. Card providers may even raise your credit limit or offer you an unsecured credit card after a period of responsible use. You can find some of our picks for the best secured credit cards here 

4. Get a Student Credit Card 

If you’re heading to college soon, another good starter option is the student credit card. Student credit cards have more lenient qualification requirements, have low or nonexistent annual fees and often offer incentives for responsible behavior.  For instance, the Discover it Chrome student credit card offers cash back for good grades, 2% cash back at gas stations and restaurants on up to $1,000 in purchases per quarter and a cash back match at the end of the first year.  

5. Use Good Credit Card Habits  

When you do land a credit card, long-term responsible use is necessary to build and maintain your good credit. That includes paying your bills on time, carrying a low balance and paying your balance in full.

“Do your best not to carry a balance on the card. If you carry a balance and pay only the minimum monthly payment, it can take decades or more to pay off the debt,” says David Levy, Editor at Edvisors Network. “Late payments result in late fees, and some credit card issuers will increase your interest rate if you’re late with a payment. Making payments on time will help you build a good credit history.”

As you build your credit, it’s a good idea to monitor your credit reports and credit scores for errors and signs of fraud, which will also help you maintain your hard-earned credit standing. You can get your your two free credit scores, updated every 14 days, at Credit.com.

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College Students Are Actually Pretty Good With Credit Cards

college-students-and-credit-cards

When people think of credit cards and college students, they don’t often conjure up an image of a responsible young adult, either because of stereotypes they’ve been exposed to or their own negative experiences. In reality, college students generally do a decent job managing their credit cards — at least, that’s what one survey suggests.

Most college students (72%) pay off their credit card balances each month, according to a survey by credit bureau Equifax. Of course, not that many students actually have their own credit cards. A recent survey by lendedu.com found that fewer than 40% of current graduate and undergraduate students actually have a credit card in their name. The survey occurred in June and included responses from more than 600 American college students ages 18 to 24, and, of that sample, 42% said they have at least one credit card. The margin of error for the entire sample is plus or minus 4 percentage points.

Only 10% of respondents with credit cards said they carry a balance (the remaining 18% said their parents pay off their balances each month). Even though paying your balance in full doesn’t directly affect your credit score, it’s a smart practice: Paying your statement balance means you’re not incurring interest charges on your purchases (three cheers for saving money), and it can help you keep your credit utilization rate low. (Your credit utilization rate is how much of your credit limit(s) you use, and it’s the second-most influential aspect of your credit scores. You can see how your credit card use affects your credit by getting two free credit scores, updated monthly, on Credit.com.)

Building Good Habits 

It’s a good thing that the majority of students in this survey are staying on top of their credit card debt, given that the majority of college students graduate with student loan debt, and paying off student loans is enough of a burden without also having to worry about getting out of credit card debt.

Regardless of how old you are, paying down credit card debt can be really challenging, because credit card interest rates tend to be much higher than rates on other kinds of debt, and it’s really easy to put off tackling credit card debt by just making minimum payments. Falling into credit card debt isn’t the end of the world, but to dig yourself out, you’ll need a plan. You can use this free credit card debt payoff calculator to help yourself set a goal for getting out of debt (and potentially helping your credit score along the way).

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