Credit building is difficult for children. It is possible. There are several things you can do early to help build credit. One or two credit lines are a good start. You can also cosign for a loan or credit card.
Authorized usership
Not only is credit an important life skill but it can also help with your future goals. 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. You need to decide whether you can trust the person and whether their finances can handle the obligations. Banks don't care about your good intentions, they just want you to repay the debt.
You can get a 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 good option for those who don’t desire to commit to a lengthy-term contract. Prepaid plans are often cheaper than traditional plans and allow you to add users for very low fees. Numerous major carriers offer incentives for adding new users.
Getting a secured credit card
You can build your credit history by getting a secured card. These cards are very similar to regular credit card, but they require a deposit. It is usually equal to 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 lead to you being approved for a regular credit card, or 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. The debit card is very similar to a prepaid card in the sense that you can withdraw funds from your bank account. 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 build credit histories by making minimum payments on their credit cards. However, young adults have limited income and credit history, so the options available 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.