Although buying a house or a car may be a while away for you as a teenager, it is important to start building credit as soon as possible. The more that you do to build a good credit history as a young person, the easier you will have it when you need a good credit score later in life. We have compiled just a few ways that you can build credit as a teenager.
First, you should see if your parents will allow you to become an authorized user on their account. As an authorized user, you will receive the benefits of good credit if your parents have a good credit score. You will have your own card, and the purchases you make on that card will go toward building your credit score. Your parents may also appreciate this option, as it gives them the opportunity to give you advice on your spending habits and can assist you in developing good financial health.
Second, ask your parents if they would be willing to let you pay a bill, maybe even your car insurance. This simple act will begin to establish your payment record. Having documentation of consistently paying bills on time will boost your credit score greatly, and I am sure your parents would appreciate you taking responsibility for your newfound privilege as a driver.
Third, when you turn 18 and get your own credit card, consider a student credit card, as you may get additional benefits for good behavior. Remember that you will often need to demonstrate a sufficient amount of income to get a credit card on your own. If you do not make much money, you will need a co-signer, someone who is a joint owner on the account and is responsible for paying the credit card company if you do not. My dad was willing to serve as a co-signer for me until I was able to establish a credit history on my own. It is also important to pay your balance every month. There is no need for you to pay copious amounts of money in interest, plus paying your balance shows that you are responsibly using your card.
In conclusion, it may seem pretty early for you to start thinking about building credit, but the earlier you establish good financial habits, the easier it will be for you when you get older. It is important to use common sense when you are in the beginning stages of building credit. Avoid spending more than you earn, only have one credit card, and use that card responsibly. If you are reliable in these three areas, you will have a great start to a good credit history as a teenager.