8 Ways to Help Your Teen Build Good Credit Now - Experian (2024)

Experian, TransUnion and Equifax now offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com.

In this article:

  • 1. Educate Your Teen on Credit Basics
  • 2. Open a Checking Account
  • 3. Teach Your Teen the Difference Between Debit and Credit
  • 4. Add Your Teen as an Authorized User to Your Credit Card
  • 5. Teach Your Teen How to Monitor Their Credit History
  • 6. Consider a Secured Card
  • 7. Have More Payments Reported
  • 8. Be a Good Role Model

People with good credit are more likely to be approved for a loan, qualify for lower interest rates and pay less for home and auto insurance than those with fair or poor credit. But establishing a solid credit history doesn't happen overnight. It requires taking positive action consistently, over time. The good news is there are things you can do now to help your teen build a strong credit profile that will help set them up for future success.

1. Educate Your Teen on Credit Basics

Kids aren't born knowing how credit works, and it's a mistake to assume they'll figure it out as they get older. Just as you taught them how to tie their shoes, it's up to you to teach them how credit works, how to build good credit and why it matters. If you're talking to your kids about credit for the first time, stick with the basics.

Teach them what a credit score is and how lenders and other businesses may use it to make decisions about credit applications, determine interest rates and more. Connect the dots for your child about the real-life consequences good or bad credit can have on their ability to qualify for a loan, get a low interest rate, rent an apartment or pay lower utility deposits.

Review the habits that can positively affect their credit history, such as paying all bills on time, keeping credit utilization low and applying for credit sparingly. Explain to them how paying late, accumulating debt and applying for too many accounts in a short amount of time can lower their credit score.

Providing your teen with this information can help them avoid mistakes that can negatively affect their finances in the long term.

2. Open a Checking Account

Most banks and credit unions offer checking accounts for minors or students, but you'll need to be a joint account holder if your teen is under 18. Opening a checking account can help your teen get used to making deposits and withdrawals and balancing their account. When your child is ready, give them access to a debit card that's linked to their account. Although debit card purchases aren't included in credit scores, using one can help prepare them for their first credit card because they will need to track their spending and account balance to ensure they have enough money to cover a purchase.

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ADDITIONAL FEATURES

  • Build credit by paying bills like utilities, streaming services and rentØ
  • $50 bonus with direct deposit
  • No monthly fees, no minimums
  • Secure & FDIC insured up to $250,000§
  • Zero liability for fraudulent purchasesʫ
  • 55,000+ no-fee ATMs worldwide**
  • Deposit cash at popular retailers#
  • Live customer support 7 days a week

Banking services provided by Community Federal Savings Bank, Member FDIC. Experian is not a bank.

3. Teach Your Teen the Difference Between Debit and Credit

Before your teen gets their first credit card, they need to understand the difference between debit and credit. Because you can typically only spend what you have in your checking account when you use a debit card, debit cards make it difficult for teens to overspend unless they opt into their bank or credit union's overdraft protection program. If your child has overdraft protection, their financial institution will cover a purchase even if they don't have enough money in their account to pay for it.

But banks and credit unions charge a fee for this service, and fees can add up quickly if your teen attempts to make multiple purchases without realizing their account balance is low. To avoid this scenario, consider skipping the overdraft protection while they get used to using a debit card. Without it, they won't be able to spend more than they have in their account, which acts as a guardrail for spending.

With a credit card, you can make purchases up to the card's credit limit, no matter how much money you have on hand. Teach your kids that using a credit card is like taking out a high-interest loan. Encourage them not to charge more than they can repay at the end of each credit card cycle. Tell them that if they don't pay the bill in full each month, the remaining balance earns interest at high rates—the average interest rate on credit cards that earned interest was 22.75% in November 2023, according to the Federal Reserve. Overspending with a credit card can result in debt that's difficult to repay.

4. Add Your Teen as an Authorized User to Your Credit Card

Many credit card companies allow cardholders to add an authorized user to their account. An authorized user is a person who can use the card to make purchases but isn't responsible for making payments. Adding your teen as an authorized user can help them establish a solid credit history—if you pay the bill on time and don't use too much of your available credit. However, you could hurt your child's credit history if you have a high credit utilization rate by letting the balance get too close to the card's limit.

Keep in mind, not all credit card companies report authorized user account activity to the credit bureaus. Before adding your teen to your account, find out what the company's policy is. Adding them as an authorized user won't help their credit if the issuer doesn't report the payment information.

5. Teach Your Teen How to Monitor Their Credit History

Everyone needs to monitor their credit history to ensure the information in their file is accurate. Getting your child to regularly check their credit reports from the three consumer credit bureaus (Experian, TransUnion and Equifax) can help them quickly identify and resolve errors. Let them know they can check their free Experian credit report anytime or get free weekly copies from all three bureaus at AnnualCreditReport.com.

Have your teen carefully review their report for inaccuracies, such as payment history mistakes, accounts they don't recognize, incorrect account opening and closing dates, duplicate accounts and more. If your teen finds an error, they have the right to dispute items on their credit report with the credit bureau and the company that reported it.

6. Consider a Secured Card

A secured credit card is like an unsecured card with training wheels. When your teen is ready to move from debit to credit, it can be a good place to start. It's easier to qualify for a secured card than an unsecured card, and it allows teens to build credit while reducing the risk of overspending and accumulating debt. Your child must be at least 18 years old to open a credit card, and if they're under 21, they must show proof of income.

If your teen is approved for a secured card, they must provide a deposit to the card issuer before using it. The deposit is often equal to the card's credit limit and acts as collateral for the card. Your teen can use the card to make purchases just as they would with an unsecured credit card. They are responsible for paying the bill each month, and if they default and stop paying on the account, the credit card company can use the money in the account to cover what your child owes.

Credit card issuers generally report secured card payments to the credit bureaus. A history of on-time payments can help your child establish a solid credit profile, but late and missed payments will hurt their credit score.

7. Have More Payments Reported

If you think lenders are the only companies that can report information to the credit bureaus, think again. Features like Experian Boost®ø report other types of payments, such as utilities, cellphone, rent and insurance. If your child rents an apartment, consider having them sign up for a rent reporting service to report their monthly rental payments to one or more of the credit bureaus. Reporting additional payments may help your teen build credit faster.

8. Be a Good Role Model

All kids—even teens—learn what to do by watching what their parents do. Modeling responsible money management and credit usage can help your teen establish good habits. Show your teen how you pay your bills on time and in full each month, live within your means, stay out of debt, and check your credit reports regularly for errors. If your teen sees you doing these things, they're more likely to do them too.

The Bottom Line

Building a solid credit history isn't difficult, but it takes consistent, positive action. Taking the time to teach your child credit basics and money management skills now will give them the foundation they need to use credit responsibly as young adults and throughout their lives.

If your child is 18 and doesn't yet have a credit report, they can begin their credit journey with Experian Go™. Experian Go helps jump-start their credit profile and help them begin building credit for free.

8 Ways to Help Your Teen Build Good Credit Now - Experian (2024)

FAQs

Can you really boost your credit score with Experian? ›

Experian Boost is an easy way for you to take control of your credit and build long-term credit health—just by paying your bills. When you connect your bank or credit card, we'll look for bills with positive history that you can add to your Experian credit file. It could also instantly raise your FICO® Score!

How do I build my child's credit before 18? ›

The best way to build your child's credit is to start teaching them credit basics early on. You can add them as an authorized user on your credit card when they're ready and, eventually, you may choose to cosign one of their loans or credit cards.

How to get a 650 credit score fast? ›

  1. Pay credit card balances strategically.
  2. Ask for higher credit limits.
  3. Become an authorized user.
  4. Pay bills on time.
  5. Dispute credit report errors.
  6. Deal with collections accounts.
  7. Use a secured credit card.
  8. Get credit for rent and utility payments.
Mar 26, 2024

What are the negatives using Experian Boost? ›

Cons
  • Your score may not improve. There's no guarantee that your credit score will improve after adding the additional information.
  • Only works with Experian. ...
  • Must share personal data.
Jan 31, 2024

How to raise your credit score 200 points in 30 days? ›

How to Raise your Credit Score by 200 Points in 30 Days?
  1. Be a Responsible Payer. ...
  2. Limit your Loan and Credit Card Applications. ...
  3. Lower your Credit Utilisation Rate. ...
  4. Raise Dispute for Inaccuracies in your Credit Report. ...
  5. Do not Close Old Accounts.
Aug 1, 2022

How can I raise my credit score 100 points overnight? ›

10 Ways to Boost Your Credit Score
  1. Review Your Credit Report. ...
  2. Pay Your Bills on Time. ...
  3. Ask for Late Payment Forgiveness. ...
  4. Keep Credit Card Balances Low. ...
  5. Keep Old Credit Cards Active. ...
  6. Become an Authorized User. ...
  7. Consider a Credit Builder Loan. ...
  8. Take Out a Secured Credit Card.

How to get a 700 credit score in 30 days? ›

7 Ways to Raise Your Credit Score in 30 Days:
  1. Dispute Credit-Report Mistakes. ...
  2. Make a Big Debt Payment. ...
  3. Reduce Your Credit Card Statement Balance. ...
  4. Become an Authorized User. ...
  5. Dispute Negative Authorized-User Records. ...
  6. Ask for a Higher Credit Limit. ...
  7. Write a Goodwill Letter.
May 22, 2023

How to get 800 900 credit score? ›

Here are eight helpful tips.
  1. Maintain a consistent payment history. ...
  2. Monitor your credit score regularly. ...
  3. Keep old accounts open and use them sporadically. ...
  4. Report your on-time rent and utility payments. ...
  5. Increase your credit limit when possible. ...
  6. Avoid maxing out your credit cards. ...
  7. Balance your credit utilization.

How long does it take to get a credit score from 700 to 750? ›

If you are already at 700, then it will take you a few months to get to 750 with consistent good credit behavior – like paying your bills on time, maintaining a low credit utilization rate, not applying for multiple new credit accounts at once, and keeping old credit cards open even if you don't use them much.

What bills qualify for Experian Boost? ›

On the Experian Boost landing page, identify the checking or credit card account(s) you use to pay the recurring bills you want added to your credit report. Eligible bills include cellphone and utility bills, streaming subscriptions and rent that you pay online.

How quickly does Experian Boost work? ›

Yes, if you receive a score increase when you add payments with Experian Boost, the increase will happen instantly. Any lender that uses the FICO® Score 8 with Experian data will see that change reflected in score results. Users of Experian Boost whose scores improve see an average FICO® Score increase of 13 points.

Should I link my bank account to Experian Boost? ›

The links power the Experian Boost and Personal Finances tools, and they're generally safe and secure. However, there's always a risk with sharing information, and you can unlink accounts at any time and request Experian to delete your personal data.

Does Experian boost actually make a difference? ›

Yes, if you receive a score increase when you add payments with Experian Boost, the increase will happen instantly. Any lender that uses the FICO® Score 8 with Experian data will see that change reflected in score results. Users of Experian Boost whose scores improve see an average FICO® Score increase of 13 points.

Does Experian give an accurate credit score? ›

Credit scores from the three main bureaus (Experian, Equifax, and TransUnion) are considered accurate. The accuracy of the scores depends on the accuracy of the information provided to them by lenders and creditors. You can check your credit report to ensure the information is accurate.

Is it worth paying for Experian? ›

Ultimately, whether it's worth paying for a premium Experian account or not will depend on how closely you need to monitor your credit record. Since a general overview of your credit score is free, if you only require a cursory look at your credit report then these premium features might not be worth the investment.

Why is my Experian score so much higher than FICO? ›

When the scores are significantly different across bureaus, it is likely the underlying data in the credit bureaus is different and thus driving that observed score difference.

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