How to start building credit at 18

Building credit is key

As a high school student, when you think about credit, you’re probably thinking about scoring some extra credit on a test, or maybe even earning college credits through AP courses. I’m sure the last thing you’re thinking about are ways to build your personal credit. This kind of credit, of course, is tied to your finances. Having good credit will enable you to borrow money for things like a car, college, or even a house, as well as smaller investments you may want to make on a credit card.

That said, some of those financial investments can seem far away from your 18th birthday. Between your homework, extracurricular activities, and perhaps even a part-time job, you may be thinking, “Why should I start building credit now?”

Well, for starters, part of your credit score — a three-digit number that helps lenders determine how likely you are to repay borrowed money — is dependent on a variety of factors. One of those factors is how long you’ve been managing credit. The length of time you’ve had a credit card, for example, can positively impact your credit score.

Other factors, like your payment history, the different types of credit you have (loans vs. credit cards, etc.), and your credit usage (the amount of money you owe vs. the amount of credit you have available), help determine your credit score, too.

By building credit at or before 18, you’ll begin to show potential lenders that you’re a responsible borrower.

Ways you can start building credit:

Become an authorized user on a credit card

The best way to start building credit and get a credit card under the age of 18 is to become an authorized user on a parent’s or other adult’s account. An authorized user is connected to an account, and has permission to use another person’s credit card, but isn’t legally required to pay the credit card bill. As an authorized user, you may have the opportunity to have your own card with your name on it, but the account still belongs to the primary cardholder. The primary cardholder is responsible for the payments and charges made to the account.

To be added as an authorized user to an account, the primary cardholder has to do the heavy lifting. They can call their credit card company, or in some cases, they can add you as an authorized user on their account online.

You want to be sure the primary cardholder is paying their bills on time and in good financial standing. As an authorized user, your credit can benefit from the positive (or negative) financial habits of the primary cardholder. As an authorized user, you can still get in the habit of making on-time payments by setting a reminder in your phone each month to pay the primary cardholder for your personal credit card charges on the account.

Consider a job

If you’re already working, you’re ahead of the game. Getting a job before you’re 18 is helpful in building a sound financial foundation. Although your work experience doesn’t necessarily build your credit, having a job is a great way to convince a potential primary cardholder to let you become an authorized user on their account. You can show them you want skin in the game and you’re able to take responsibility for some of the spending that occurs on the account.

Having a steady source of income will help when you apply for your first credit card, too. Before issuing a new credit card, lenders want to be sure you can pay back the money you borrow.

Get your own credit card

A good first credit card option is a secured credit card. A secured credit card is a bit different than a “typical” credit card because you have to fund the card up front with your own money in order to receive your line of credit. For example, if you deposit $500 toward a secured credit card, you’ll be able to charge up to $500 onto your card account. This is a great way to practice positive budgeting habits and it’s also an easy option to start building credit.

There are specific cards out there designed specifically for 18-year-olds, too. Many will remind you of payment dates, track your credit score, and reward you just for making on-time payments.

Remember, credit cards are not “free money.” You are responsible for the charges you put onto your account. Spend responsibly and do your due diligence beforehand to find the right credit card for you.

Keep track of your credit score

You found a job, you’ve been added as an authorized user on a trusted person’s credit card, or you’ve landed your first credit card. Now what? Stay on top of your progress by checking your credit score. Most companies, including Sallie Mae, provide you with free access to your credit score as part of their services.

Additionally, as part of the Fair Credit Reporting Act (FCRA), the three main credit reporting companies, Equifax, Experian, and Transunion, are required to provide you with your credit report at your request, free of charge, every 12 months.

By viewing your credit score on a regular basis, you can ensure you’re taking the right steps to drive your score in the right direction — up!

Make on time payments

Now that you’ve become familiar with your credit score, and ways you can monitor it, it’s time to focus your attention toward the most important factor of your credit score — your payment history. According to FICO, your payment history makes up 35% of your FICO score. In order to continue to positively affect your payment history, you want to make sure you’re making on time payments every month.

Whether you access your credit card account through your computer or a mobile app, your payment due date should be easy to find. Set a reminder on your phone or circle the date on your at-home calendar (or both!) and be sure not to miss it.

Pay more than the minimum payment

Paying your bill on time is just one piece of the credit-building process. You want to make sure you’re paying your bill on time and paying more than the minimum payment amount. By paying more than the minimum payment amount, you will further lower your overall balance, which in return, will improve your credit utilization. Your credit utilization, or the amount you owe, is also an important component of your overall credit score. The less $$$ you owe, the more your credit score will improve.

If possible, you should pay your entire balance off in full each month. If you’re unable to meet that standard, experts recommend keeping your credit card balances less than 30% of your available credit, or your credit score will likely drop.

Like I said before, building credit at 18 may not be your top priority. That said, if you think you’re ready to prove just how responsible you are, you can begin to set yourself up for financial freedom in your future by learning how to build credit now.

footnote FICO and "The score lenders use" are trademarks or registered trademarks of Fair Isaac Corporation in the United States and other countries.

footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

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