Credit building is difficult for children. But it is possible. It is possible to build credit at an early age by doing a few simple things. Having one or two credit lines is a great start. You can also cosign for a loan or credit card.
Authorized user
Building credit is an important life skill. It can help you get what you want later in your life. Credit can help you secure the best terms for financial products and save you money. It takes research and some planning but it will pay off long-term.
Co-signing for a loan or credit card
While co-signing for a loan or credit card can increase your credit score and help you qualify for a lower interest rate, you need to be careful. You must decide if the person is trustworthy and able to pay the debts. Banks won't be interested in your good intentions. Instead, they want to ensure that you pay 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 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. There are many incentives offered by major carriers for adding users.
Getting a secured credit card
Secured credit cards are a great way for you to build your credit history. These cards can be used in the same way as regular credit cards but require a deposit. This is usually equivalent 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 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. Most banks offer a free FICO credit score for new customers once per billing cycle. The debit card functions in the same way as a prepaid card, except that you can withdraw money from your bank. The debit card has the advantage of building credit, if it is linked with an existing credit line.
Make 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 at paying off their balances every month and not having more than 30% of available credit.