Credit building is difficult for children. However, it is possible. There are several things you can do early to help build credit. One or two credit lines are a good start. Co-signing a loan and credit card can also be possible.
Authorized user
Building credit is not just a life skill. But it can help to get the things you want later on in life. You can get the best rates on financial products, and even save money with good credit. Although it takes time and effort, the end result will be worth it.
Co-signing of a loan or creditcard
You need to be careful when you co-sign for a loan. You have to decide whether or not you can trust this person and if they are financially able to handle the obligations. Banks won't be interested in your good intentions. Instead, they want to ensure that you pay the debt.
Get a cell-phone plan
You can build your credit and get a low-credit cell phone plan. There are many options. These plans are a good option for those who don’t desire to commit to a lengthy-term contract. Prepaid plans are also typically much less expensive than traditional plans. You can also add users for very small fees. There are many incentives offered by major carriers for adding users.
Secured Credit Card
Getting a secured credit card is a good way to begin building your credit history. These cards work in the same manner as regular credit cards except that you must make a deposit. Usually, this amount is equal to your credit limit. Additionally, these cards are reported to the three main credit bureaus. This will help you establish your credit history. This will eventually allow you to get a regular credit line or other credit products.
Getting a debit card
A debit card is a good choice if you want to build your credit. Many banks offer a free FICO Credit Score to new customers once a billing cycle. In the sense that funds can be withdrawn from your bank account, the debit card works very similarly to a credit card. It can build credit if linked to an existing credit card.
Make minimum payments on credit cards
Making minimum payments on credit cards can help young adults build their credit history. Young adults often have limited credit history and income so the options are limited. Young adults should aim at paying off their balances every month and not having more than 30% of available credit.