As a child, credit building can seem difficult. But it's not impossible. There are several things you can do early to help build credit. One or two credit lines are a good start. You can also co-sign a credit card or loan.
Authorized user
Building credit is not just a life skill. But it can help to get the things you want later on in life. Good credit can help get you the best terms on financial services and even save you some money. It takes research and some planning but it will pay off long-term.
Co-signing on a loan, credit card or other financial transaction
You need to be careful when you co-sign for a loan. You need to decide whether you can trust the person and whether their finances can handle the obligations. Banks are not interested in your good intentions; they simply want to make sure you pay back the debt.
Getting 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 different options, including prepaid plans that don't pull your credit. These plans are an excellent option for people who don’t wish to commit to long-term contracts. Prepaid plans are also typically much less expensive than traditional plans. You can also add users for very small fees. Most major carriers also offer incentives for adding additional users.
Secured credit cards
It is a good idea to get a secured creditcard in order to build your credit score. These cards have the same features as regular credit cards. However, they require a minimum deposit of at least the credit limit. Additionally, these cards are reported to the three main credit bureaus. This will help you establish your credit history. This will eventually help you get a regular card and other credit products.
Getting a debit card
A debit card is a good choice if you want to build your credit. New customers can get a free FICO credit score from most banks once per billing cycle. In that you can withdraw funds from your bank accounts, the debit card is similar to a pre-paid card. If linked to a credit line, the debit card can help you build credit.
Minimal payments for credit cards
Young adults can build credit histories by making minimum payments on their credit cards. Young adults often have limited credit history and income so the options are limited. Young adults should aim not to have more than 30% credit and pay their bills every month.