When you are a child, it may seem difficult to start building credit. It is possible. To build credit, there are some things you can do as a young person. A minimum of one credit line is a great place to start. A co-signer can be added to a loan or credit card.
Authorized user
Not only is credit an important life skill but it can also help with your future goals. You can get the best rates on financial products, and even save money with good credit. It takes some forethought and research, but it will pay off in the long run.
Co-signing on a loan, credit card or other financial transaction
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 do not care about your good intentions. They just want to see you repay the debt.
Getting a cell phone plan
If you have good credit history, you may be eligible for a plan that requires low credit. There are many options available, including prepaid plans that won't pull your credit. 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. Numerous major carriers offer incentives for adding new users.
Secured credit cards
It is a good idea to get a secured creditcard in order to build your credit score. These cards are very similar to regular credit card, but they require a deposit. It is usually equal to 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 eventually lead to you being approved for a regular 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 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 their credit history by making minimum payments to credit cards. Unfortunately, young adults don't have a lot of credit history or income, so their options are limited. Young adults should strive to pay off their debts each month and not have a credit card balance greater than 30%.