How to Build Credit as a Teenager

Being a teenager is hard. You’re still considered a kid until you’re 18, but you’re beginning to understand and take on adult responsibilities. One of those responsibilities is credit.

Having good credit makes it easier to access money when you need it. It can also help you secure employment and housing later on. However, good credit doesn’t come out of nowhere. Here’s a look at how to build credit as a teenager.

How to build credit as a teenager: before you turn 18

If you want to start building credit but you aren’t 18 yet, your options are somewhat limited. However, it’s never too early to get started. Here are two options.

1. Becoming an authorized user

One of the most effective ways to start building credit before age 18 is to become an authorized user on a parent’s credit card.

You can’t open your own credit card account until you’re an adult, but you can be added as an authorized user. An authorized user is someone who has been given permission by the account holder to access the credit line. The account holder is ultimately responsible for paying the bill.

Being an authorized user comes with some risk. If you become an authorized user and the primary account holder doesn’t make payments, your credit score may suffer.

2. Learning about money management

Although it doesn’t directly build credit, taking the time to learn about credit (and finances in general) can help you manage your money now and in the future. When you do open a credit card account or take out a loan, you’ll know how to avoid many of the most common mistakes.

How to build credit as a teenager: after 18 years old

Once you turn 18, you’ll have far more credit-building tools at your disposal. 

1. Getting a student credit card

When you become a legal adult, you’ll be allowed to open your own credit accounts. However, getting approved for a credit card may be more difficult than you think. 

Your credit score gives lenders an idea of how risky it may be to extend credit to you. If you don’t have a credit score at all, you might not be approved.

Student credit cards were designed to address this exact issue. They’re made specifically for people with little to no credit history, and most have fairly low spending limits. 

Getting a student credit card, making regular purchases, and paying those purchases off in full can help you build credit history. Don’t use more than 30% of your credit line at any given time, and always pay off your account balance before the due date in order to avoid interest charges.

2. Getting a secured credit card

Secured credit cards offer an alternative to student cards. With this type of card, you give the lender a one-time refundable cash deposit. That deposit becomes your credit line. 

You make purchases using your secured credit card and pay them off, just like with any other card. If you fail to make your payments, the lender can use your deposit to cover the balance.

Many secured credit cards give you the option to upgrade to a regular credit account after a certain amount of time. Once you do this, you’ll receive your deposit back.

3. Using a credit-builder platform

For many people, getting (and responsibly using) a credit card is a go-to way to build credit. But it’s not the only one. If you’re wondering how to build credit as a teenager, credit-builder apps can make your journey much easier.

Generally, these apps give you a small line of credit (or sometimes a small personal loan). As you make payments, the app will report them to the major credit bureaus. This establishes a history of consistent payment, which could help boost your credit score faster than you think.

Kikoff is one of these credit-builder tools. And because we don’t do an initial credit check, you won’t have to worry about adding a hard inquiry to your credit report. Here’s how our core service works:

• Once you’re approved, you gain access to a credit line that you can use in the Kikoff store
• As you make regular payments, we report them to all three credit bureaus
• Making on-time payments and keeping utilization low can improve your credit score over time

When you choose one of our premium accounts, you can access even more tools to boost your credit score. With rent reporting, for example, we’ll report your rent payments to credit bureaus so that you can build credit faster. We also offer a secured credit card.

How your parents can help you build your credit as a teenager

When you’re a teenager (and especially if you’re under 18), building credit can be difficult without a little extra help. Your parents may be able to help you build credit by doing the following:

• Adding you as an authorized user on a credit card
• Co-signing a lease or loan
• Discussing money management fundamentals with you
• Helping you save money for a secured credit card

When you build a strong financial foundation as a teenager, you’ll be far more likely to responsibly manage credit going into adulthood.

Why building credit as early as possible matters

Credit is part of everyday life, but misconceptions about it are still common. For example, some people avoid credit entirely until they need to take out a mortgage or car loan. This is a mistake.

Lenders look at your credit score and credit history when deciding whether to lend you money. One factor that influences your credit score is the length of your credit history. This means that the sooner you can start building credit, the better. Don’t wait until you need it!

Conclusion

At Kikoff, we understand that mastering financial fundamentals like credit can be tough. That’s why we aim to make building credit easy and affordable. If you have questions or you’re ready to get started, contact us or open your account today!