Information About Credit for Teenagers

Teenagers can establish and use credit

Teens are not too young to learn about establishing and maintaining good credit scores. They should be aware that credit cards, loan payments, apartment rent and utility payments all affect credit scores, and a negative mark on a teenager's credit score will follow him into adulthood.

Uses

Teens need credit to get better interest rates on car loans, to rent an apartment and establish utility services, and to apply for certain jobs in law enforcement and financial services.

Secured Credit Cards

Teens can open "secured" credit card accounts to start establishing credit. These accounts require an initial deposit and a credit card that can be used for up to the deposited amount.

Parent's Credit Cards

A teen can be an "authorized user" on a parent's credit card. However, teens should not use this method if the parent has bad credit because the parent's credit will negatively affect the teen's, and if the teen is delinquent on payments, it affects both the teen's and parent's credit.

Student Credit Cards

Banks and credit unions--especially those located near college campuses--may offer "beginner" cards to students. These cards offer low limits--$200 to $500 for example--for teens over 16 who have an adult cosigner.

Bank Accounts

Teens should open their own checking and savings accounts. Both help establish a credit record.

Statistics

The number of teens using credit cards has more than tripled since 1999. The average college freshman owes about $1585 in credit card debt. Today, even teens in high school are being targeted by credit card companies.

References

• Credit FYI: How Teens Can Build a Credit History
• MSN Money: Teach Your Teen How to Handle Credit Cards
• Teens Credit: Tips for Getting Credit as a Teen

Resources

• Articles.MoneyCentral.MSN: How Teens Get Sucked into Credit Card Debt