Help Your Teenager Start Earning Good Loans Before He Becomes an Adult
With all the wisdom you have now, imagine if you could turn back the clock and start earning good loans from an early age. While you can’t change history for yourself, you can help your kids build a strong financial foundation—and at an earlier age than you might have imagined. Even if your child is not yet old enough to have a credit card, there are steps you can take to start building your credit history now.
A good credit history will help your child rent their first apartment, get better interest rates, and save thousands of dollars throughout their lives. Here’s what you can know to help your teen earn good confidence in their future.
Make sure they don’t already have a credit report
Above all, take a moment to make sure your child is not the victim of a mistake or identity theft. Even if you thought your teen had a clean credit history, it doesn’t hurt to contact the credit bureau and check your child’s credit. God saves man, who save himself.
Add them as an authorized user to your card
Before you set up your child’s own credit card, you can add them as an authorized user to a long-established credit card you already use. It can help your teen build credit if your card issuer reports the information to credit bureaus, and the credit bureaus include this information on their credit reports. If this information is not shown on a credit report, it may not matter to their credit.
Once your teen is old enough to have their own credit card, you can remove them as authorized users from your card. Don’t be alarmed if your child’s credit drops a little – this is temporary and will quickly recover when he uses a new card. This instant failure is still preferable to having your teenager with no credit at all.
If you are adding your teenager as an authorized user, remember that you are linking them to your credit. If you make all your payments on time, you are helping both of you build positive credit. If you miss payments, you could hurt both of you.
Check things with a prepaid card
While you want your child to start earning good loans as early as possible, you also want to make it easier for them to access the credit space without causing harm. Consider testing the water with a prepaid card for your teen. While prepaid cards cannot build your teen’s credit history, they are a useful tool for establishing financial responsibility. This is a great option for younger teens who are learning that even with a card, they still need to live within their means. The habits they practice with a prepaid card will help them become responsible credit card users in the future.
Graduate student card
Your child must be at least 18 years old to open a credit card in their name. For young people under the age of 21, they may also need a guarantor, guarantor or co-applicant who is at least 21 years old and can make the required minimum account payments.
For older teens, your child may choose a student credit card. This type of card is designed to help users start earning credit, but with easier eligibility requirements than a standard credit card. A secure credit card is a similar option that does not require a credit history to be approved.
Tell your kids about credit
With all the tips above, the most important thing you can do is teach your child healthy financial habits—and model those habits on their own—so they can earn good loans on their own. Teach them the basics of improving a low credit score , maintaining a high one , even building credit without a credit card . Remember that everything related to money may seem abstract to a teenager until they are old enough to make their own decisions and face their own consequences.