How to Set Your Teen Up for Good Credit by Age 18


Teens will have a credit score as soon they keep one credit account open for about six months, according to FICO. Though they might not realize it, the credit history teenagers start to develop will have a huge impact on their lives, from the interest rate they receive on their first auto loan to the kind of credit card they can obtain in college. Because of this, parents need to make sure their children are well-informed about the benefits and pitfalls of managing credit, and how to build a great credit score.

A recent 2014 study by the Federal Reserve Board in Washington, D.C., found poor credit (larger account balances and delinquency on credit accounts resulting in credit scores dips) directly increases a young adult’s likelihood of suffering financially and needing to move back home. People with poor credit face higher costs of borrowing and limited access to credit for car loans and mortgages, as well as limited life choices, since landlords, cell phone providers, utility companies and employers often screen applicants using credit scores.

Keep in mind, everybody’s FICO credit score (regardless of age) is calculated considering five main credit categories:

  • 35 percent: payment history
  • 30 percent: amounts owed
  • 15 percent: length of credit history
  • 10 percent: new credit
  • 10 percent: types of credit

You can improve your teen’s credit score in every category by using any and all of the strategies found on! 

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