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Key takeaways

  • The earlier you begin building credit the better. A good score can lead to more opportunities and better savings.
  • You can establish a payment history and begin working on your score by becoming an authorized user, opening a secured credit card, or taking out a credit builder loan.
  • Responsible financial behavior will boost your score. Always pay your bills on time, don’t carry a balance, and beware of common mistakes.

Start building credit when you are ready, but the sooner you start the better. Establishing a good score makes life easier. A good score will help you save money and give you more opportunities for credit cards, apartments, and even jobs.

The trick is that it can be hard to get credit when you don’t have it in the first place. Luckily there are tools in place to help beginners get started building credit for the first time.

Let’s take a look at how you can get started and then what you can do to improve your score.

Why you should start building credit early

The sooner you start establishing a credit history, the better off you’ll be. But at what age can you start building credit? Generally, you can start as soon as you turn 18, when you are legally eligible to apply for your first card or loan. However, you can start building credit at 16 or younger with the right tools.

The sooner you start the more opportunities you’ll have the more money you’ll save. Establishing credit simply makes life easier and more affordable. You will be able to:

  • Rent an apartment: Landlords will check your report. If you don’t have a good score and a history of on time payments your application may be denied. If you’re accepted, you may have to pay a higher security deposit or need a cosigner or guarantor.
  • Get your own utilities: Utility companies – electricity, water, internet, phone – run checks. If you don’t have a score, you may have to put down a deposit to be approved.
  • Apply for your own credit card: Your score affects what card you can get and with what terms. A lower score or none at all will result in high cost cards.
  • Land the job you want: Certain employers will check your report as a way to see your financial health and how responsible you are.
  • Secure car insurance: Depending on the state you live in, you may be able to obtain a lower premium if you have a good score.

Credit affects so much of your financial life, it’s a good idea to start early. Begin to build credit before you’re 18 if you can.

5 ways to establish credit

Many young people ask, “At what age can you build credit?” and are often surprised to learn that you can begin as early as 18 by opening your first account. Opening your first account can be tricky, but it doesn’t have to be.

Take a look at the following five options and choose a few that look good to you. No matter which one you choose, the key is to be responsible meaning always pay your bills on time.

Apply for a secured credit card

Figuring out how to start building credit at 19 begins with opening your first credit card account. You can get your own card once you turn 18. If you’re under 21, you may be required to show proof of income so that the issuer knows you can afford to make payments. The problem is, when you don’t have a score or payment history it will be hard to get a card with decent terms.

One of the best types of cards to start out with is a secured card. Secured cards are backed by a cash deposit that serves as your limit. The deposit also acts as collateral for the issuer making these cards very easy to get. The security deposit is 100% refundable when you close your account in good standing and typically starts at $200.

Alternative secured cards like Chime’s Credit Builder Visa and Current’s Build Card don’t require a cash deposit. Instead, they are linked to your bank account.

Make sure that the card issuer reports payments to all three major credit bureaus – Equifax, Experian, and TransUnion. Use them responsibly and pay your bills on time. Once you have a good score, move on to an unsecured card.

Read more about credit cards!

Become an authorized user on a parent’s credit card

If you want to start building credit at 16 or younger consider becoming an authorized user on a friend or family member’s card. You benefit from the primary cardholder’s payment history and can use the card without being legally accountable for the bill.

Before you ask to become an authorized user, make sure the primary cardholder has a good score and responsible financial habits. Also make sure that the issuer reports the authorized user to all three major credit bureaus, not all do.

Get credit for the bills you pay

Utility bills are typically not reported to the credit bureaus as they aren’t a form of borrowing. That said, some services allow you to report your monthly bills. Potential bills include rent, utility, subscriptions, and even phone bills. If you have a thin file – less than 5 accounts – then adding monthly bills can help you establish or improve your score.

credit builder loan

Get a credit-builder product or a secured loan

Credit-builder loans are specifically designed to boost your score. These products work by holding the loan amount in a savings account while you make regular monthly payments. Your timely payments are reported to three credit bureaus, helping to build your payment history.

These loans are usually for small amounts $300-$1,000 and you can get them from various financial institutions. The great thing about these loans are they both help you improve your score and save money at the same time. Do be aware of interest rates and fees before you apply for a loan.

Set up a joint account or get a loan with a co-signer

One of the ways consumers under 25 can establish credit is by securing a small personal loan. If you can’t get a loan on your own, set up a joint account or secure a loan with a co-signer. You are responsible for the payments but the co-signer is on the hook if you don’t pay. Make timely payments on the loan and your score will improve.

Make small purchases and pay them off quickly

A practical tip on how you can build credit at 18 – or any age for that matter – is to keep your utilization low. Aim to use less than 30% of your limit. An easy way to do this is to make small purchases and pay them off in full each month. This habit not only keeps your balance manageable but shows lenders your ability to repay debt promptly.

Ready for your first credit card?

Learn how to successfully apply and get started.

Common mistakes young people make when building credit

When you’re brand new to anything it’s easy to make mistakes. It’s no different here. You have new bills to pay and new debts to keep track of. There’s a lot to keep in mind. Let’s go over a few common mistakes to avoid.

1. Overusing Credit Cards: Many people receive their first card and view it as free money, leading to spending beyond their means. This can quickly result in accumulating debt that is difficult to manage and may lead to high interest charges if the balance is not paid in full each month. Instead, treat it like a debit card and only use it for purchases you can pay off within the month.

2. Making Late Payments: Missing or making late payments is a significant mistake that can adversely affect your score. Your payment history makes up 35% of your FICO score. Even one payment more than 30 days late can drop your score and will stay on your report for up to seven years. Set up payment reminders or autopay to avoid this.

3. Applying for Too Many Accounts: Each time you apply for a new account, a hard inquiry is made, which typically lowers your score by a few points. Space out your applications by at least six months to give your score time to recover.

4. Carrying a balance: There’s an old myth that carrying a balance helps your score. Actually the opposite is true. It’s much better for your score and your wallet to pay your bill in full every month. Don’t be tempted to only make the minimum payment. If you don’t pay off your balance in full you will be charged interest on the rest making your next bill more expensive. Always pay your bills on time and in full.

5. Underestimating Interest Rates and Fees: Not paying attention to the terms of the agreement can lead to unexpected charges. Young users often fail to comprehend how interest rates and fees affect the total amount they will owe, leading to debt that becomes unmanageable. Know your interest rate and potential fees then take actions to avoid them.

Learn more about how to build your score on MoneyFor!

How can I monitor my credit?

Once you have a score, it’s important to monitor it and work on bringing it up. Regularly monitoring your score and reports allows you to check for accuracy, track your progress, and quickly address any unauthorized or fraudulent activity.

Check your credit scores and reports

You are entitled to a free credit report from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—once a year through AnnualCreditReport.com. Additionally, Many issuers and banks will send you your FICO score for free once a month.

Check your report for any errors or inaccuracies then dispute any that you find with the issuing bureau. Discrepancies could be a simple mistake or a sign of identity theft. They can also drag your score down so it’s important to stay on top of them.

Average credit score increase

How to build credit at 19 – or any age – involves educating yourself about the factors that influence your score. Your score is determined by weighing the following factors:

  • Payment history
  • Amount used
  • Length of time you’ve had accounts
  • Types of accounts
  • New inquiries

Teens and young adults can improve their credit scores by paying bills on time and keeping balances low.

How much your score will increase each month varies depending on individual financial habits and the specific scoring model used. Generally, it will take six months to establish a FICO score – used by 90% of lenders. You can establish a VantageScore only one month after opening an account.

Bottom line

The question of at what age you can start building credit is a good one. The answer is, the earlier the better. Establishing a good score takes time, so starting early can give you a leg up.

A good score leads to better financial opportunities and more savings. Who wouldn’t want that? Figure out which method – or methods – you want to use and begin working on your score.

No matter which strategy you choose, they all have one thing in common: responsible usage. Pay your bills when due, don’t borrow too much, and in time you will get a good score.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.