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8 Tips on How to Build Credit When You're Young


Young man writing his future financial goals in a notebook

Your credit score makes a difference in so many areas of life, from the rates you pay for auto insurance to the kind of mortgage you qualify for. But young people often find it hard to build a credit history, which is a major contributor to your credit score. Here are eight ways to get started building a credit history.


1. Piggyback off Your Parents

The Credit CARD Act requires people under 21 years of age to have a co-signer or proof of independent income to get a card in their own name.

If you don’t have either, consider becoming an authorized user on your parents’ account. If your parents make you pay them back for your purchases, this will give you practice in making regular payments.

Many credit card companies also report any activity on the account for both the primary account holder and the authorized user, which can help an authorized user build a credit history. However, this practice varies from card-issuer to card-issuer. With Credit One Bank, for example, account activity will only appear on the authorized user’s credit reports if the authorized user is the primary account holder’s spouse.


2. Pick the Right Card

With a debit card, every purchase you make comes directly out of your own bank account, so no credit is granted and debit card activity is not reflected on your credit reports. With a credit card, the card-issuer initially pays for your purchases and you pay them back each month. This does help you build a credit history.

If you don’t qualify for an unsecured credit card, you may be able to get a secured card. With a secured card, you make a fully refundable security deposit and gain access to a line of credit for the same amount.


3. If You Have a Credit Card, Use it for Small, Recurring Charges

You need to use the card and make consistent, on-time payments to build a credit history. But you don’t want to make more purchases than you can afford to pay back.

One solution is to put something small and recurring on your card, like your Netflix or gym membership. Set up auto-pay so you never miss a payment, and you’ll be building a credit history without even thinking about it.


4. Don’t Go Wild

Life is not a music video, and you did not just win the lottery because you now have a credit card. As a young person building credit, it’s wise to avoid buying big-ticket items with your new card. Stick to reasonable, smaller expenses you can easily pay back every month.

There are two benefits to this. First, you’ll be much less likely to fall behind on your payments. Second, you’ll have more credit available for actual emergencies. No, your favorite band playing a concert near you doesn’t count as an emergency.


5. Money and Friends Don’t Mix

Thinking of co-signing for your friends or letting one of them become an authorized user on your credit card? Don’t do it. Their mistakes can hurt you later. Besides, you’re trying to build your own credit. Once you get your own finances straight, you’ll be in a better position to help others.


6. Take Life One Card at a Time

There are good reasons to have multiple credit cards. But, if you’re young and just starting out, why tempt fate or run before you can walk?

Having multiple cards can make it easier to forget to pay one and also encourage you to spend too much, both of which could negatively affect your credit. Try to stick to one card until you’ve been paying your balance in full—consistently and on time for at least a few months or until you’re confident you can handle more credit—before applying for more credit cards.


7. School Loans are for School

If you’re in college, remember why you’re there. It may be tempting to use your student loan money on a car, rent, or a long weekend in Vegas because you’re only young once.

But you’ll only be middle-aged once too, and you don’t want to be deep in debt when you get there. That job you’re hoping for may not happen, and student loans normally are not discharged even during bankruptcy. So use your tuition money for tuition.


8. Keep It Simple

With all the little tips for building credit, the best advice is still the most basic. Don’t spend beyond your means, make at least the minimum payment every month, and always make it on time. If you follow these simple suggestions, you should ultimately be rewarded with a lifetime of good credit.


About the author:

Robert Lillegard

Robert Lillegard started his wordsmithing career as a national food and travel writer for magazines like The New York Times, Outside, Cooking Light, and Midwest Living. As a contributor to Credit One Central, Robert has leveraged his expertise in taxes, budgeting, and building credit to create engaging content. When he’s not crafting a story or blog post, Robert spends his free time obsessing over producing the perfect loaf of bread at a Duluth-based artisanal bakery he co-owns.

This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.