Starting to build credit is an important milestone when you step into adulthood. Your credit score is like a passport for key financial transactions. If you want to get a loan, buy a car, lease an apartment, or make big purchases, your credit history will be crucial. Lenders and landlords rely on it to gauge your financial trustworthiness. Many young adults find it tough to build a good credit score at 18 because they have no prior credit history.
One of the easiest ways to build credit is by using a credit card and always paying off the balance. However, without any credit history, qualifying for a credit card can be tricky, which often leaves young adults wondering what to do next.
You don’t have to wait until you turn 18 to start building credit. There are several ways to begin this journey earlier. If you want to give yourself or your children a strong start in building a credit history, consider these steps:
### Become an Authorized User
Getting a credit card under 18 is challenging. But you can still build credit by becoming an authorized user on a parent’s credit card. This lets you benefit from the primary cardholder’s established credit. However, this approach requires a high level of trust since their credit actions will affect yours.
### Obtain Employment
While having a job doesn’t directly improve your credit, it helps you build a foundation for the future. When you apply for credit, lenders look at your employment history. Juggling work and school in your early teens creates a solid employment track record, demonstrating your ability to repay debt.
### Consider a Secured Card
Starting to build credit before 18 can be intimidating, especially if you’re not fully aware of the responsibilities involved with a credit card. At 18, qualifying for a credit card isn’t always easy. A secured credit card, backed by a cash deposit, is a good starting point. For example, a $1,000 deposit gives you a $1,000 credit line. You use it like a regular credit card, but the deposit makes it easier to qualify. Responsible use of a secured card might quickly lead to an offer for an unsecured card.
### Apply for a Student Card
College orientations often feature booths where you can sign up for a student credit card. These cards are generally easier to qualify for and sometimes offer rewards for good use. If you’re heading to college, a student card can help you build a financial foundation.
### Cultivate Good Habits
No matter your age, building credit relies on good financial habits. Credit is a lifelong commitment, and repairing a bad score is difficult. Develop habits like paying bills on time and clearing balances each month to maintain a solid credit score.
### The Role of Age
Age can influence your credit-building journey to some extent. While those under 18 face certain limitations, starting early with good financial habits will pay off. There isn’t a set age to begin building credit—much like saving, the sooner the better. Don’t wait until after college; start in your early teens with student or secured cards in your early twenties and build from there.
When you’re ready to start building credit, the choice is yours. Once you turn 18, take steps immediately to achieve a strong credit score.