How to Build Credit for Your Child: A Parent’s Guide

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Teaching your child about credit will help them to be approved for loans, housing, and financial independence. From explaining the dangers of overspending and giving them savings goals to helping them build a strong credit profile before they even become an adult (yes, it’s possible), there are plenty of things you can do to set them up for success.

Why It’s Smart To Build Credit Early

Credit is one of those things that matter more than most people realize — until they need it. A good credit score doesn’t just help with getting a loan. It can impact insurance rates, renting an apartment and even job offers in certain industries.

By helping your child start early, you’re giving them:

• A head start on financial independence
• Access to better credit card and loan options in the future
• A built-in understanding of how credit works

And it’ll save them from learning through costly mistakes later.

Step 1: Talk to Your Child About Credit and Financial Responsibility

Discuss with your child the importance of paying bills on time and keeping debt low. Learning to spend less than you make is a discipline that needs to be learned.

Here are the basics to cover:

• A credit score is like a financial reputation. It tells lenders how responsible you are with money.
• Paying bills on time and keeping debt low helps build a positive credit history.
• Missed payments, maxed-out cards and unpaid debts can tank your score and follow you for years.

Depending on the age of your child, you can talk about the dangers of borrowing money. Tell them how interest rates work and what can happen to your reputation (credit score) if you fail to pay back what you owe.

Step 2: Check If Your Child Already Has a Credit Report

Sounds strange, but yes — it’s possible your child already has a credit report, especially if their identity was used fraudulently. This is something worth checking before you begin building their credit.

Here’s How:

1. Go to AnnualCreditReport.com
2. Follow the instructions for requesting a minor’s credit file (for kids under 13, it’s a mail-in process)
3. Review the report for errors or signs of fraud

If something looks off — like accounts you didn’t open — contact the credit bureaus and report it to the FTC at IdentityTheft.gov.

Step 3: Set Up a Bank Account in Their Name

When your child has their own bank account, you can support them with:

• Tracking their spending and saving
• Using a debit card
• Learning how money flows in and out of an account

Give them savings goals, and show them the satisfaction that comes with purchasing delayed gratification.

IThere are many banks and financial apps that specialize in educating kids about money. They offer debit cards that can be regulated by parents.

Step 4: Add Your Child as an Authorized User on Your Credit Card

Your child doesn’t need to have spending access but they’ll start building credit history based on your account.

Just make sure:

• The credit card company reports authorized users to credit bureaus (not all do)
• You maintain a low balance and pay on time, because your habits become their history
• You check the minimum age (many issuers allow this starting at age 13)

It’s a simple, low-risk way to give them a credit history before they’ve even graduated high school.

Step 5: Put a Small Bill in Their Name (and Manage It Together)

Once they’re a little older, you can try assigning a real-world bill to their name, like a streaming service or a prepaid phone plan.

If it’s through a provider that reports to credit bureaus (not all do), this can help build credit. More importantly, it gives your child a chance to:

• Take responsibility for monthly payments
• Learn the consequences of missing a due date
• Build habits around financial organization

Pro tip: Set calendar reminders or automatic payments to help them stay on track while they’re still learning.

Step 6: Try a Credit-Builder Loan Once They Turn 18

A credit-builder loan is a small loan (typically under $1,000) where the money is held in a secured account while your child makes monthly payments. Once it’s paid off, the funds are released to them and the positive payment history gets reported to the credit bureaus.

Many community banks and credit unions offer these, and they’re made specifically for first-time borrowers.

This is a great option for teens who may not qualify for a regular credit card right away but want to build credit on their own.

Step 7: Keep an Eye on Their Credit and Keep the Conversation Going

Here’s how to stay involved:

• Check their credit report together at least once a year
• Talk about credit usage — keeping balances below 30% is ideal
• Remind them about due dates and how missed payments can affect their score
• Celebrate milestones, like paying off a loan or getting their first credit card

The more you normalize these conversations, the more confident they’ll be handling credit on their own.

When Can You Start Building Credit for Your Child?

You can start laying the groundwork (like education and savings) as young as elementary school. For actual credit-building:

The earlier you start, the better — but it’s never too late to help your child build healthy credit habits.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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