How to Start Building Your Credit Before 18

Credit represents an individual’s financial trustworthiness, reflecting their history of borrowing and repaying money. This history is compiled into a credit report, which lenders, landlords, and even some employers review to assess financial responsibility. A strong credit history is important for many significant life events, such as securing an apartment lease, obtaining favorable interest rates on car loans, or qualifying for a mortgage to purchase a home. Building credit early provides a substantial advantage, laying a foundation for future financial endeavors.

How Credit History Develops for Minors

Minors, individuals under 18, generally do not possess their own independent credit files and lack the legal capacity to enter into binding credit contracts, such as applying for loans or credit cards. Credit bureaus do not automatically create credit reports for children. However, a minor can begin to develop a credit history through specific associations with an adult’s existing credit. This occurs when a minor’s identifying information is linked to an account held by a parent or guardian.

The most common way this happens is through becoming an authorized user on an adult’s credit card account. In such cases, the payment activity of the primary account may be reported to the credit bureaus under the minor’s name, initiating their credit file. This method offers a way for a minor to passively build a credit history.

Becoming an Authorized User

Becoming an authorized user on a parent’s or guardian’s credit card is a common way for a minor to begin building a credit history. An authorized user is granted permission to use the primary account holder’s credit card, but they are not legally responsible for the debt incurred on the account. This arrangement allows the minor to benefit from the payment history of the primary account, potentially establishing a positive credit record.

For this strategy to be most effective, the primary account holder should have a long-standing positive credit history, consistent on-time payments, and maintain low credit utilization. The credit card issuer will require the minor’s full name, date of birth, and often their Social Security Number (SSN) to report the account activity to the major credit bureaus. Providing the SSN is important because some issuers may not report authorized user activity to credit bureaus without it, which would negate the credit-building benefit for the minor.

To add an authorized user, the primary account holder contacts their credit card issuer through their online account portal or by phone. Once the minor is added, a credit card may be issued in their name, though the primary account holder remains solely responsible for all charges and payments. The payment history of this account will then appear on the authorized user’s credit report. It is important to note that while this builds credit history, some lenders may still prefer to see credit accounts where the individual is solely responsible for repayment.

Monitoring Credit Activity

Once a minor has credit activity reported, a credit file can be established in their name. It is important to regularly monitor this credit activity to ensure accuracy and to detect any potential issues. Parents or guardians can check if a credit report exists for their minor child by contacting the three major credit bureaus: Equifax, Experian, and TransUnion.

Accessing a minor’s credit report requires the parent or guardian to provide proof of identity for themselves and the child, along with documentation proving their relationship. Some bureaus may have online portals for inquiries, while others might require requests via mail. Once obtained, the report should be carefully reviewed for accurate personal information, correct reflection of authorized user status, and a positive payment history. It is also important to scrutinize the report for any unfamiliar accounts or inquiries, which could indicate identity theft.

Consumers are entitled to a free copy of their credit report from each of the three major credit bureaus annually through AnnualCreditReport.com.