Credit building is difficult for children. However, it is possible. It is possible to build credit at an early age by doing a few simple things. It is a good idea to have one or two credit accounts. You can also cosign for a loan or credit card.
Authorized usership
Building credit is not just a life skill. But it can help to get the things you want later on in life. A good credit score can help you save money and get the best terms possible on your financial products. It will take some research and planning, but it will pay off over the long-term.
Co-signing on a loan, credit card or other financial transaction
Although cosigning for a loan, credit card or other financial transaction can improve your credit score and allow you to qualify for lower interest rates, it is important that you are careful. You have to decide whether or not you can trust this person and if they are financially able to handle the obligations. Banks do not care about your good intentions. They just want to see you repay the debt.
Getting a cell phone plan
Once you build your credit, you will be able to get a phone plan with low credit requirements. There are many options. These plans can be a great choice for those who don’t want to sign a long-term agreement. In addition, prepaid plans are usually much cheaper than a traditional plan, and you can add additional users for very little money. Numerous major carriers offer incentives for adding new users.
Secured Credit Card
You can build your credit history by getting a secured card. These cards are similar to regular credit cards, except that they require a deposit, usually the equivalent of the credit limit. Additionally, these cards are reported to the three main credit bureaus. This will help you establish your credit history. Eventually, this will help you get a regular credit card or other credit products.
Getting a debit card
If you are interested in building your credit, getting a debit card is a good option. Many banks offer a free FICO Credit Score to new customers once a billing cycle. In that you can withdraw funds from your bank accounts, the debit card is similar to a pre-paid card. If linked to a credit line, the debit card can help you build credit.
Making minimum payments on credit cards
Young adults can improve their credit score by paying minimum monthly payments on credit cards. Unfortunately, young adults don't have a lot of credit history or income, so their options are limited. Young adults should aim not to have more than 30% credit and pay their bills every month.