Ask the Experts: How can I help my teenager begin to establish good credit?
“What can I do for my 15 year old to help start establishing her credit history?” –Robert
That’s a great question and this is a great time to start thinking about building your daughter’s relationship with credit.
The first steps are:
Don’t attempt to build your daughter’s credit history for her; build it with her. Talk about how credit works and explain how you use credit. Help her understand how to safely and smartly use credit to establish her creditworthiness. Give her the knowledge she needs to make smart choices on her own. If you need help, check out our eBook Getting the Credit You Deserve. It’s got answers to (nearly) every question you could have about credit.
Aside from education, the first step is usually helping your child open both a checking and a savings account. Both should be used responsibly – they need to avoid doing things like over-drafting either account. The accounts in and of themselves won’t impact her future credit reports and credit scores, but building a positive relationship with a bank will make opening her first credit card that much easier.
Next, you can help her open a credit card account. She won’t be able to do this on her own prior to turning 18, but you can do one of two things: you can co-sign on a credit card with her or you can make her an authorized user on a card in your name. Either option will help her establish her credit identity and both options put you on the hook if she misuses the card in some way. Once she’s 18 she can open an account in her own name. You should definitely shop around for the best available terms, but don’t forget to start your search at the bank where she’s been maintaining her checking and savings accounts. If you're having difficulty opening a regular credit account, consider opening a secured credit card to start out.
From there it’s just a matter of using credit wisely – avoiding missed payments, maxed out accounts, charge offs and other pitfalls.