It can seem hard to build credit when you're a child. But it's not impossible. To build credit, there are some things you can do as a young person. One or two credit lines are a good start. You can also co-sign a credit card or loan.
Authorized usership
Not only is credit an important life skill but it can also help with your future goals. A good credit score can help you save money and get the best terms possible on your financial products. It will take some research and planning, but it will pay off over the long-term.
Co-signing of a loan or creditcard
Co-signing for credit cards or loans can help improve your credit score, but you should be cautious. It is important to assess whether the person you are cosigning for can be trusted and if their finances are capable of supporting the obligations. Banks do not care about what you are doing; they only want to see that you repay the debt.
A cell phone plan
Once you build your credit, you will be able to get a phone plan with low credit requirements. There are many options. These plans are a great option for people who don't want to commit to a long-term contract. Prepaid plans are generally cheaper than traditional plans and you can easily add users to your plan for very little extra money. Major carriers often offer incentives for adding more users.
Getting a secured credit card
A secured credit card can be a great way to start building your credit history. These cards can be used in the same way as regular credit cards but require a deposit. This is usually equivalent to the credit limit. Your activity on these cards will be reported to the major credit bureaus. This can help you build your credit history. This will eventually lead to you being approved for a regular credit card, or other credit products.
Getting a debit card
A debit credit card is a great way to improve your credit rating. A majority of banks offer new customers a free FICO score once per billing cycle. A debit card can be used to withdraw funds from your bank account, which is very similar in concept to a prepaid. It can build credit if linked to an existing credit card.
Make minimum payments on credit cards
Young adults can build their credit history by making minimum payments to credit cards. Unfortunately, young adults don't have a lot of credit history or income, so their options are limited. Young adults should aim to pay their balances off every month and not carry a balance larger than 30% of their available credit.