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It’s a great idea to consider credit if you are a parent of a minor or if you are 17 years old and preparing to handle your own finances.
When you are under 18, it’s never too early to start considering how you can get on track for a positive future with credit because it can take years of consistent, on-time payments to build a good credit score.
There are a number of effective methods out there if you want to start building credit before you turn eighteen or assist your teen in doing so.
If you’re not sure which credit cards are best for 17-year-olds, these steps will help you build credit at 17 in a way that will benefit you for many years to come.
Why start building credit before turning 18?
A crucial component of personal finance is understanding credit reports and scores.
However, there are two main justifications for beginning credit building right away:
- A high credit score can mean the difference between a lender rejecting your application for a new loan or credit card and approving it. If accepted, having excellent credit can help you get the best interest rates, which, for example, could save you tens of thousands of dollars on a future mortgage.
- Building credit takes time. It takes months to obtain a credit score and years to build a very good one, even though you can quickly destroy one. Thus, it’s a good idea to begin establishing credit as soon as possible.
Can you get your own credit card or loan at 17?
You’re not the only one who has been wondering, “What age can you get a credit card?” A minor cannot typically get a new credit card or loan from a bank or credit card company. As young adults under the age of 18 are typically not permitted to enter into legal agreements, what is the minimum age requirement to obtain a credit card under your name in the United States?
If a young person cosigns with a parent or other legal guardian, some credit card companies might be willing to open a new account for them. However, you most likely won’t be able to open a credit card with a credit card issuer at age 17 unless you are legally emancipated.
According to Experian, some of the top credit card issuers don’t have a technical minimum age requirement or allow you to open a card as young as 13, 15, or 16, in some cases. But those approvals may also look at your credit and income, which could make it hard to get approved before turning 18.
How to start building credit at 17
You would need to have a credit-related account, such as a credit card or loan, in order to begin establishing credit at the age of 17. Contrary to common belief, obtaining a job alone will not help you establish credit. Neither can a regular bank account such as a checking or savings account or debit card. It takes credit to build credit.
Being an authorized user on a parent’s credit card is one of the best ways for a teenager to establish credit—more on that in the following section.
The alternative would be to cosign with the teen on a personal loan, student loan, or other loan, if they qualify, or assist them in opening their own credit card or loan, which could be quite difficult.
Authorized users can take advantage of good credit from their parents
If you have good credit yourself, you have a secret weapon that you can use to help your family build credit. Most credit cards have a feature that lets you add someone to your account who is known as an authorized user.
Most credit cards are not given to two people, in contrast to some loans. One name appears at the top of the application, and that person is principally in charge of paying off the card’s balance as well as any future credit card debt.
But, they can add more users as family members or anyone else they trust. The authorized user receives a card bearing their name from the bank or credit union, but it is linked to the same credit card account.
That credit card account appears on your credit report when you are an authorized user. Lenders are informed by a note that you are an authorized user and are not legally obligated to pay the remaining balance on the loan. However, it affects your credit score and appears to be a typical credit card account.
Authorized users should see a credit rating boost from a credit card if the primary account holder maintains a low balance in relation to their credit limit and pays off any credit card debt on time. However, that account may negatively impact their credit if there are any missed or late payments.
Because of this, it’s crucial to use this feature carefully and avoid going over the spending cap. Find out if your credit card issuer permits authorized users by contacting them. Additionally, confirm that authorized users are reported to the main credit bureaus.
Checking your credit score and credit report at 17
It’s never too early to check your credit, even if you’re still too young to purchase a lottery ticket or a cigar. While many minors will discover that they do not yet have a credit report or credit score, those who do are able to check their credit in the same way that adults do.
AnnualCreditReport.com is the official government website where you can obtain your credit report for free. com. For additional information about your credit, including your credit score, you can also check out the free resources provided by Credit Sesame, Experian, or other reliable sources.
Preparing for a positive future with credit
Adults often find it easy to attribute their financial woes to bad credit, but more often than not, other financial difficulties are what lead to bad credit.
Having a good credit history can help teenagers build a valuable asset that allows them to access a variety of helpful financial products and save money on interest rates that are only available to those with the best credit.
You are making a very wise choice if you are considering how you can support your teen in the future (or yourself, if you are reading this before you turn 18!). Your teen could save tens of thousands of dollars and remain in a position where they can prosper financially if they put early emphasis on establishing good credit.
- Forbes. “10 Ways Young People Can Build A Strong Credit Record”. https://www. forbes. com/sites/forbesfinancecouncil/2018/01/23/10-ways-young-people-can-build-a-strong-credit-record/?sh=7891b7a34749.
- Experian. “When Should My Child Get a Credit Card?”. https://www.experian.com/blogs/ask-experian/when-should-my-child-get-a-credit-card/
Eric Rosenberg is a former bank manager and corporate finance worker with a Bachelor’s degree and MBA in finance. See Eric on Linkedin and Twitter.
Lauren Bringle is an Accredited Financial Counselor® with Self Financial– a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.
At Self, our mission is to give readers up-to-date, objective information on credit, financial health, and related subjects. This content is supported by research and linked articles from reliable sources. Every piece of content on Self is authored by seasoned financial industry contributors and approved by one or more individuals.
Posted on September 1, 2020 Self is a venture-backed startup that assists individuals in establishing savings and credit. Disclaimer: Self does not provide financial advice. This page’s content is meant to be used as general consumer information only; it is not meant to be used as financial, legal, or regulatory advice. The information displayed does not represent the opinions of the issuing banks. Self does not support or warrant the accuracy of any third-party information, even though this information may contain references to such resources or content. Advertisements for Self products can be found on the Credit Builder Account, secured Self Visa® Credit Card, and Level Credit/Rent Track links. To fully comprehend the context of Self’s original content and any affiliated content, please take into account the dates of publication.
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FAQ
Can a 17 year old build credit?
Normally, children cannot open a credit card in their own names until they are at least 18 years old. However, if they are under 21, they must additionally demonstrate that they are able to independently make the account’s minimum payments. A lot of teenagers begin with credit-building cards, such as secured or student credit cards.
Does a 17 year old have a credit score?
Although your child under the age of eighteen is unlikely to have a credit report, they may have one owing to one of the following circumstances: Authorized user: Although minors are not permitted to sign credit card or loan agreements, they may become authorized users on their parents’ credit card accounts.
Can I get credit score at 17?
Although it is not possible to establish your child’s credit history before they turn 18, you can educate them about financial literacy and the consequences of borrowing money so that they will be aware of them when they are older. Get accepted for finance. Rent or take out a mortgage. Get cheaper interest rates on credit.
Read More :
https://www.self.inc/blog/how-to-build-credit-at-17