When you are a child, it may seem difficult to start building credit. It is possible. There are several things you can do early to help build credit. One or two credit lines are a good start. A co-signer can be added to a loan or credit card.
Authorized usership
Building credit is an important life skill. It can help you get what you want later in your life. Good credit can help get you the best terms on financial services and even save you some money. Although it takes time and effort, the end result will be worth it.
Co-signing for a loan or credit card
Co-signing for credit cards or loans can help improve your credit score, but you should be cautious. It is crucial to determine if you trust the person signing the loan or credit card agreement and whether they can afford the obligations. Banks do not care about what you are doing; they only want to see that you repay the debt.
How to get 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 great for those who don't want a long-term contract. Prepaid plans are also typically much less expensive than traditional plans. You can also add users for very small fees. Many major carriers offer incentives to add users.
Getting a secured credit card
Secured credit cards are a great way for you to build your credit history. These cards are similar to regular credit cards, except that they require a deposit, usually the equivalent of the credit limit. These cards also report your card activity to the three major credit agencies, which can help establish your credit history. This will allow you to eventually get a credit card or other credit products.
Getting a debit card
If you are interested in building your credit, getting a debit card is a good option. For new customers, most banks offer a free FICO rating 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. The debit card has the advantage of building credit, if it is linked with an existing credit line.
Making minimum payments on credit cards
Young adults can help build credit by making minimum credit card payments. Young adults often have limited credit history and income so the 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.