Learn how to start building credit and money management skills as a teen—authorized user cards, budgeting basics, and what to do when you turn 18.
# Building Credit and Financial Literacy Before You Turn 18
Forming a solid credit foundation from a young age may help you manage financial responsibilities in adulthood. Here's how to get started now.
Why Credit Matters Right Now
Credit scores play a significant role in many financial decisions, including getting a loan, renting an apartment, and sometimes getting a job. A good credit score can influence not only the credit cards you may get in the future, but also your eligibility for loans and ability to rent an apartment or even buy a home.
Financial literacy is essential for teens because it protects their future. Without knowing how to manage money, they risk being taken advantage of by predatory lenders and making costly mistakes with debt, which can lead to a lifetime of financial struggles.
Building Credit Before 18
A minor can't get a credit card of their own. If your teen is under 18, they can't apply for a credit card in their name. But you have options.
Become an Authorized User
By adding your teen as an authorized user to one of your credit card accounts, you may be able to help them build their own credit even before they turn 18. Responsible use could help your teen establish and build their credit history. If you're new to credit, you should have your first credit score within six months, and your credit will be affected whether or not you use the card yourself.
However, be careful: Negative actions, like missed payments or a high credit utilization ratio, could negatively impact credit scores for you both.
Open a Debit or Prepaid Card
A debit card can help teenagers learn how to manage a checking account, pay bills, and save money. However, using a debit card doesn't build credit history. Debit cards are great for learning money management skills, but they won't build your credit score.
Some cards don't let your child spend more than they have in their account (like a debit card) but build their credit history (like a credit card). Once they turn 18 and verify their accounts, the card will report their existing transaction history as positive payment history to the credit bureaus.
Getting Your First Credit Card at 18
When your teen turns 18, they can legally open a credit card in their name. But per the CARD Act of 2009, applicants between 18-20 years old must show they have adequate independent income to qualify. That means they can't use their parents' income or a partner's income on their application.
Secured vs. Student Cards
Unlike a typical "unsecured" credit card, secured credit cards require a down payment. That down payment then acts as the cardholder's credit limit. Student credit cards typically have a lower credit limit and sometimes have higher credit approval rates for students with little to no credit history and limited incomes.
Building Financial Literacy Now
Financial literacy gives teens and young adults the tools to make confident decisions about earning, saving, spending, and credit.
Master the Basics
Start with the basics: what credit is, why it's important to keep balances low and make monthly payments on time, and how interest works on credit cards. Teens should understand how credit scores are calculated (factors like payment history, amounts owed, length of credit history, new credit, and credit mix) and how their financial actions can impact their score.
Budget and Save
The 50/30/20 rule is a simple budgeting guideline that recommends dividing your income into three categories: 50% for essential expenses, such as housing, food, and transportation; 30% for discretionary expenses, such as entertainment and clothing. Encouraging teens to save a percentage of their allowance—such as 10–30%—instills discipline and a deeper understanding of money management.
Get a Job
Getting a part-time job may prepare you to manage a credit account in the future. Even though having a job doesn't directly build credit history, it may help you become more responsible with money. Building a work history at the age of 16 or older may be a helpful start in showing how you manage financial responsibilities.
The Bottom Line
A study by the National Endowment for Financial Education found that teens who receive financial education are more likely to save money, less likely to max out credit cards, and better at managing their finances as adults. Start now—your future self will thank you.
Sources
[Discover: How Teenagers Can Build Credit Before Turning 18](https://www.discover.com/credit-cards/card-smarts/how-to-build-credit-under-18/)
[Capital One: How to Build Credit as a Teenager](https://www.capitalone.com/learn-grow/money-management/how-to-build-credit-as-a-teenager/)
[Consolidated Credit: Financial Literacy for Teens](https://www.consolidatedcredit.org/financial-news/financial-literacy-for-teens-preparing-the-next-generation/)
[Credit Karma: Best Credit Cards for Teens](https://www.creditkarma.com/credit-cards/i/credit-cards-for-teens)
[VantageScore: Financial Literacy for Teens: 5 Tips for Good Money Habits](https://vantagescore.com/consumers/blog/financial-literacy-for-teens-5-tips-money-habits)
[CCFCU: Teaching Your Teen About Money](https://www.ccfcu.org/teaching-your-teen-about-money/)
