Can You Build Credit Before 18: Establishing a Strong Financial Foundation

Can You Build Credit Before 18: Establishing a Strong Financial Foundation

Can you build credit before 18? You cannot be too young to work on getting a good credit history, which will help you create a robust financial future. Although you can only have a credit score from age 18 and up, there are several ways you can establish a solid financial foundation by building credit long before you reach adulthood.

Key Takeaways

  • A strong credit score is required to secure future loans to study, get a credit card, or buy a home.
  • Building credit during your teens can help you get a strong start when you need to borrow money.
  • Your parents or guardians can play the most vital role in your path to building credit. They are also responsible for providing the education and guidance to help you gain financial literacy.

Building Credit at a Young Age

The last thing on a young person’s mind is building credit. The reasons are that young people have limited credit experience and ignorance of how good credit can make their lives easier. Therefore, if you haven’t realized its importance and that you can build credit before 18, here’s more information about why you should start and get a leg up:

Easier to apply for credit – You need a credit history and scores when applying for a loan and credit card, making it easier to get approved. Additionally, you may get better terms and interest rates if you have built credit.

Renting property – Most landlords check your credit report before renting an office, apartment, or home to you. If you have poor or no credit, landlords usually ask for a larger security deposit for the rental and utilities.

Getting a phone plan—Once you leave your parents phone plan, you will need good credit to sign a monthly payment plan or get a new phone.

Acquiring insurance – It’s most likely that when you turn 18, you will remain on your family’s insurance. However, at some point, you will need to switch to your own, and in some states, the rates for insurance are affected by your credit history. Also, you will pay a lower monthly premium with good credit.

Getting work – Some employers run a credit check on prospective employees before offering them the position. They do this to check that they are responsible, are not at high risk for theft or fraud, and are not likely to mishandle money or customer information. Read more about employer credit checks in this informative article from Nerdwallet.

Loan refinancing—Good credit makes it easier to refinance private loans, such as those you may need when you study. It also helps to get lower interest rates if you have a job and good credit.

Tips to Establish Credit for Teens

Can you build credit before 18? Absolutely. Here’s how to create a solid credit foundation from a young age:

Create Employment History

Even if you can’t have a credit card before turning 18, you can start building credit indirectly by finding a job. Work history shows that young people may be better able to handle their financial responsibilities and debt repayment.

Open a Bank Account

You are young but can open a checking or savings account with your parents or guardian. While an account won’t impact your credit score directly, responsible management helps you learn essential money management strategies because you need to ensure you don’t spend more than you have. Bank accounts are a great way to learn about credit and the fees connected to overspending.

Become an Authorized Credit Card User

Build credit by asking your parents to include you on their credit card. You become an authorized user but must use the card responsibly, helping you build credit. However, your parents or guardians should have a reliable credit history and always keep their credit card balance low, ensuring good credit scores that reflect on you. Remember that not all card issuers report to credit bureaus, so first check to ensure you are building credit.

Starting Your Credit Journey Early

A credit score consists of several variables.

  • 35% based on payment history
  • 30% based on debt (amount owed)
  • 15% based on the length of your credit history
  • 10% on the number of new credit lines
  • 10% on your credit mix

Since the length of time you have had credit makes up 15% of the time with credit, the earlier you establish a credit history, the better. You can start working on it from age 13 by becoming an authorized user of your parent’s credit cards and asking them to teach you to use them responsibly.

Therefore, it’s never too early to start if you have asked yourself if you can build credit before 18.

Ways to Build Credit as a Minor

Excellent credit score with young woman using her laptop in a chair

Besides becoming an authorized user, a few options exist to build credit. Note that your parents must assist you with these if you have wondered – “Can you build credit before 18?”

Personal loans may have high interest rates, but your parents can take out a small loan (for example, a car loan or student loan) if they co-sign and help you use it responsibly to help you establish credit. Your parents co-sign, and you are the primary borrower, making them responsible for repayments if you don’t meet them. Once you turn 18, you will have other options if you still need to establish credit. These include secured credit cards, credit-builder loans, and other credit card types.

Growing Your Credit Score Before 18

Knowing which actions to take to build a good credit score is helpful when considering the five contributing factors.

Firstly, making timely payments for any credit is critical to creating a good payment history. Pay the carrier the total amount owed monthly for credit cards.

The credit utilization ratio available to you also counts. Use about 30% of your available credit since it reflects better credit. Therefore, use about $300 if your card has $1,000 available.

To ensure you build credit, opt to become the authorized user of a parent with a long credit history and excellent credit score.

It does help to have a good credit mix, like a credit card and car loan, adding a student loan when you reach college. However, you shouldn’t apply for too many credit lines simultaneously because it can lower your score. Do it gradually, like every six months.

Teen Strategies for Building Credit

One of the most significant things to remember when establishing credit is that you are borrowing money. Therefore, you should be sure to borrow what you can afford because borrowing is expensive, entails interest rates if you don’t pay the full amount monthly, and missing payments will affect your credit.

While building credit, it’s essential to keep track of your credit report. Before you turn 18, your parents can check this from all the credit bureaus (Experian, Equifax, and TransUnion) at least once a year. The check allows them to ensure that all credit history information is accurate. They can do this from age 13 until you turn 18.

The bonus of having an established credit at 18 is that getting credit in your name and requesting a higher limit within a few months is easier.

Establishing a Strong Credit Foundation

Establishing a solid credit foundation starts from a young age and requires parental or guardian guidance. Your parents can usually judge when you are ready to take responsibility for your finances. Some kids are ready in high school, while others may start showing an interest as they approach college-going age. Please share this article from Experian with your parents for ideas on how they can help you.

Here’s what you can do to start establishing a strong credit foundation. That way, it’s certain that no one will doubt that it’s possible to build credit before 18.

Practice Responsible Spending – If you have income from a part-time job or allowance, practice responsible spending habits. Create a budget to track expenses and ensure you live within your means. Avoid overspending and prioritize saving money.

Pay Bills on Time – Even if you don’t have traditional credit accounts, paying bills on time, such as your mobile phone bill or subscription services, can help you develop good payment habits and build a positive credit history.

Monitor Your Credit Report – Once you turn 18, you can monitor your credit report to check for any errors or fraudulent activity. Your parents can do it for you before then. You’re entitled to an annual free credit report from all the major credit bureaus. These are Equifax, Experian, and TransUnion and are available on

Build Savings – Your parents have probably already told you about the importance of an emergency account. Establishing a savings account and regularly contributing to it demonstrates financial responsibility. Savings can also provide a financial cushion in emergencies and help you avoid relying too heavily on credit.

Seek Financial Guidance – Don’t hesitate to seek guidance from parents, teachers, or a financial advisor. They can offer valuable insights and advice on managing money, building credit, and planning for the future.

Credit-Building Steps for Under 18s

  • Learn as much as possible about debit, credit, and financial literacy.
  • The sooner you start saving, the more responsibly you’ll handle money and demonstrate it to others.
  • Get added as an authorized user on a responsible adult’s credit card.
  • When you enter college, you can apply for a secured credit card. You will require a deposit as collateral.
  • Practice responsible spending and budgeting.
  • Pay bills on time to establish good payment habits.
  • Regularly monitor credit reports for accuracy.
  • Seek guidance to ensure you are getting your credit building right.

Therefore, we have established the answer to the question, “Can you build credit before 18?” Yes, you can with the help of your parents and if you learn how to handle money responsibly.