Building Credit & Financial Literacy Before 18

# Building Credit and Financial Literacy Before You Turn 18

Excerpt: Start building your credit and money skills now—here's how to get ahead before adulthood hits.

Why This Matters Right Now

Financial literacy is essential for teens because it protects your future. Without knowing how to manage money, you risk being taken advantage of by predatory lenders and making costly mistakes with debt, which can lead to a lifetime of financial struggles.

The good news? 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. Starting early gives you a huge advantage.

Understanding Credit Scores

Before you can build credit, you need to understand what it is. A credit score is a three-digit number that summarizes your creditworthiness—essentially, how reliably you repay borrowed money. It plays a significant role in many financial decisions, including getting a loan, renting an apartment, and sometimes getting a job.

Timely payments mean you pay your debt bills on time and as agreed. Credit utilization ratio is how much of your available credit you're using. Keeping your credit utilization ratio under 30% is better for your credit score.

Building Credit Before 18

Become an Authorized User

The easiest way to start? When you think you're ready, a parent or guardian could add you as an authorized user on one of their credit card accounts. The youngest you can typically be is 13 at most banks.

As an authorized user, you can build credit history. Both your card activity and your parent's card activity may appear on both of your credit reports and influence each credit score.

Important: The card must be used responsibly. Responsible use could help you establish and build your credit history and contribute positively to your parent's credit. Negative actions, like missed payments or a high credit utilization ratio, could negatively impact credit scores for both of you.