How Parents Can Help Teens Begin Building Credit | Cleveland Bradley County Teachers Federal Credit Union

A credit score is a vital part of navigating the financial world. From renting an apartment to financing a vehicle or signing up for a new credit card, your credit score impacts nearly every money decision a person makes—and because length of credit is such an important factor when calculating a credit score, the earlier you can start building this history, the better.

For parents of teens, educating them about good money habits is so important—and that includes educating them about responsible credit usage. By gaining this knowledge early on, teens can hopefully avoid making serious (and costly) mistakes when they become financially independent.

Educating Teens About Responsible Credit Use

Before delving into helping a teen build their credit score, it is important to educate them about the ins and outs of responsible credit usage. Simple rules of thumb, such as always making payments on time, keeping revolving utilization low and only spending what you can afford to pay off will go a long way towards keeping them debt-free.

How Parents Can Help Teens Build Credit

Add them as an authorized account user. If you have good credit yourself, you may be able to add your child as an authorized user to your own credit card to help begin building his or her credit from a young age.

Help them sign up for a secured card. A secured credit card functions similarly to a debit card, but is designed to help build credit. Your teen can make a deposit in the amount of his or her credit limit and can practice paying the balance in full each month, then move to an unsecured card when ready.

Get them a credit builder loan. A credit builder loan is designed specifically for building up credit scores. Through a bank or credit union, your teen can take out this loan and pay toward it each month, and the lender will hold these payments in a specific fund. Once the loan is paid off, the money goes back to the borrower, and they have an increased credit score to show for it!

If you would like help setting your child up for financial success, we are here for you! Contact us today to learn more about our account options.