One of the most important things a teenager can do is learn how to use credit responsibly. However, when you’re young and have never had any credit extended to you, it can be a bit difficult to get started. For parents of teens, there are a few things that you can do to help your young adult begin building credit. Here are three options…
Secured Credit Cards
Most banks and credit unions are able to help you set up a secured credit card. You’ll need to have some money set aside in an account that the bank will “hold” as collateral on the card. Using the card every month and then paying off the outstanding balance will begin building a positive credit history.
Cosigning on a Loan
If you are planning on buying a car for your teen, consider putting them on the loan as a cosigner. Even if you are making the payments, this allows them to begin building credit and installment loans are an important aspect of credit scoring.
Add Them as an Authorized User
You can add your teen as an authorized user on a credit card account. By monitoring their usage and making sure that payments are made on time, both you and your teen can see a credit benefit.
These Strategies Work for Adults Too!
Often we see adults who have no credit history. Much like a teen, adults without credit can use the same strategies to begin building credit.
If you have questions or need assistance, please contact our office. Our friendly staff would be more than happy to help you!