How Young Is ‘Too Young’ to Start Building Credit?

When to start building credit

For many credit card issuers, there is no minimum age when it comes to building credit. Some issuers even allow parents to authorize their young children as users on their credit card accounts. The issuers know there’s no risk since the kids aren’t responsible for the payments. And if issuers do impose an age minimum, it’s usually between the ages of 13 and 16.

Whether or not you agree that it’s a good idea for a young child or adolescent to have access to a credit card, the reality is that building a credit history and understanding how to maintain a good credit score is important. The truth is, it’s never too early to learn about — and begin establishing — credit. The ability to buy homes and cars, and even rent apartments, is far more difficult without a positive credit history.

Ideal age to start building credit

There is no ideal age to begin establishing credit since every person handles responsibility differently. However, some experts say you should start to build a credit history by the time you’re in high school or college.

For example, if a 16-year-old child is ready for the challenge, the parents can make him or her an authorized user on their credit card and lay down some spending limits. Or it may be possible for a child who is 13 or 14 to show themselves capable of being financially responsible.

Some kids may not be ready to understand or begin utilizing credit until they’re 18 and entering college. At that age, parents can cosign for a credit card, knowing they’ll be responsible for the payments if their child can’t make them. If a child is at least 21, he or she can get a secured credit card in his or her own name and be completely responsible for the payments.

Building credit is not without some risk. For parents, it requires equal parts trust in your child and the willingness to let them make and learn from mistakes. But when it’s time to make the leap, there are some guidelines that can help.

Knowing when someone is ready 

There are certain questions to ask when determining if someone is ready to build credit. Is the person:

  • Genuinely interested in credit and finances?
  • Understanding of at least the basics of credit?
  • Able to save money, exercise impulse control and spend within a budget?
  • Honest about money matters?

If all of the above are true, then it’s probably safe to start building credit. Let’s take a look at some of the advantages of getting started early.

Benefits of building credit early

There is certainly an advantage to building credit early: the longer you can show a credit history, the better it is for your credit score.

If an 18-year-old opens a credit card with a cosigner, makes his or her own payments as expected, and keeps the account active, they’ll likely earn a high credit score. This is a huge benefit, since it will be easier to get approved for loans and pay lower interest rates. It’s also a big benefit when it comes to more common scenarios such as getting a job, or renting an apartment.

Adding a child as an authorized user also helps establish a credit history for that child. As long as the account is in good standing, the child will benefit.

All that being said, it’s not necessary to authorize a child as a credit card user when they’re very young. Educating young children about financial responsibility is more important than giving them access to a credit card. You can also consider giving them a prepaid debit card as an exercise in managing spending to a set amount.

The bottom line is that the age at which it’s appropriate to begin using and establishing credit really comes down to maturity. There are those who are ready to use credit responsibly at a young age. Conversely, there are many adults that don’t understand how to use credit and end up overextending themselves or missing payments. This, of course, results in damage to their credit score. Ultimately, once you start building credit — as long as you stick to good habits — the rewards can be many.

Once you’re using and establishing credit, regularly monitoring your credit report will be an essential part of maintaining good credit. This will allow you to identify any errors or to immediately handle any other issues that need to be resolved. A professional credit repair company can help you monitor your credit, and ensure that your credit report remains fair and accurate.

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