Building credit before the age of 18 can be a bit tricky, but it is possible in certain situations. The most common way for someone under 18 to start building credit is by becoming an authorized user on someone else’s credit card account. This means that a parent or guardian adds the individual as an authorized user to their credit card, allowing them to make purchases using the card. The account activity, including payment history and credit utilization, will then be reported to the credit bureaus in the authorized user’s name.
Being an authorized user can help establish a credit history for the individual, even if they are not the primary account holder. It can be a great way to start building credit early on and establish a positive credit history before turning 18. However, it’s important to note that not all credit card issuers report authorized user activity to the credit bureaus. So, it’s crucial to ensure that the credit card company reports this activity to the credit bureaus for it to have an impact on the individual’s credit history.
Additionally, it’s essential for parents or guardians to monitor the account closely and ensure that the authorized user understands the responsibility of using credit responsibly. Making timely payments and keeping credit utilization low are key factors in building a positive credit history.
While becoming an authorized user can help establish credit before 18, it’s important to remember that it’s not the same as having your own credit. Once an individual turns 18, they can apply for their own credit cards or loans and start building credit in their name. This is where the real opportunity to build credit begins.
It’s crucial to start building credit as early as possible because having a good credit history is important for future financial endeavors. Whether it’s obtaining a car loan, renting an apartment, or applying for a mortgage, having a positive credit history can greatly impact the individual’s ability to secure these financial products with favorable terms and interest rates.
While it may not be possible to build credit in your own name before 18, becoming an authorized user on someone else’s credit card can provide an opportunity to start building credit early. However, it’s important to proceed with caution and ensure that the credit card company reports the authorized user’s activity to the credit bureaus. Once an individual turns 18, they can then apply for their own credit products and continue building their credit history.