7 ways to start building credit as a teenager | MoneyUnder30 (2023)

There are plenty of ways to build credit as a teenager — even if you’re starting from scratch. Secured credit cards, student loans, and becoming an authorized user are just a few ways you can get started when you turn 18.

When you’re a teenager, all you want to do is chill with friends and survive school.

But there’s one more thing you should do if you want to enjoy the sweet, sweet freedom that comes with adulthood.

And that one thing is to start building your credit early.

If you have plans to take out a loan for college, get a new car, or buy a house, all of these things require a good credit score. So, building credit as a teenager will make acquiring these things much easier.

That said, here are seven ways you can build credit as a teen:

What’s Ahead:

1. Get a secured credit card and use it responsibly

A secured credit card is like a debit card that helps you build credit. It’s a great option for teens because you can open one with no credit history.

Here’s what you need to know about secured credit cards:

  • To open a secured card, you must make a deposit equal to your credit limit. (This is usually between $200 and $500.)
  • You’ll get charged interest if you don’t pay your balance in full each month — just like a regular credit card.
  • Once you’ve built up your credit, you can transition to a regular unsecured credit card.

The bank reports all your payments to the three credit bureaus, which is how it helps you build credit. So, you need to make your payments on time and keep your balance low to build your credit score.

Read more:

  • Best secured credit cards of 2022
  • How secured credit cards work
  • Secured credit cards vs. unsecured credit cards

2. Become an authorized user on someone else’s credit card

If you’re not old enough to get your own credit card, you can ask a parent or relative if you can become an authorized user on their account.

This is a great way to start establishing credit because you get to piggyback off of their good credit. And as they use the card and make payments on time, it’ll help build your credit history too.

But be aware — becoming an authorized user on someone else’s account is only a good idea if your parent or relative has a good credit history. If their finances are rotten, it’ll hurt you, too.

The primary owner of the account is also the one responsible for payments. So, you’ll need to discuss ahead of time how you’ll pay them back for the purchases you make.

Read more:

  • Can being an authorized user on someone else’s credit card help you build credit?
  • Authorized cardholders: the pros and cons

3. Take out a student loan

Now, we don’t recommend taking out a student loan if you don’t have to. But if you do need to take one out for your college education, then there is a silver lining: student loans actually help build your credit history. This is for a few different reasons.

First, the act of taking out a personal loan and making regular payments can help you establish a good payment history.

Second, student loans help increase the average age of your accounts. And the older your accounts, the more “responsible” you seem in the eyes of creditors.

If you decide to go this route, federal student loans may be your best bet because they’re available to anyone, regardless of credit history.

But know this: student loans won’t build your credit score very quickly. (They’re more of a long game.)

And if you do take out a student loan, make a plan to pay it off as soon as possible.

Read more:

  • How student loans work
  • The best student loans of 2022

4. Get a credit-builder loan

A credit-builder loan can be another great way to start building credit as a teen. They’re typically smaller loans that range from $500 to $1,000, and they work like this:

  • You apply for a credit-builder loan with a bank or credit union (or through a platform like Self).
  • You pay the loan back little by little each month, usually within one or two years.
  • The bank deposits your payments into a savings account for you (all while reporting those payments to the credit bureaus).
  • Once you pay off the loan, you get to keep all the money in the savings account. Plus, you get a good credit history to show for it!

Read more: Is a credit builder loan right for you?

5. Conquer the three golden rules of credit card usage

There are three golden rules you should follow with credit cards if you want them to boost your credit instead of destroying it.

If you can conquer these three rules as a teenager, you’ll avoid a lot of bad credit woes as an adult:

Golden rule #1: Always make your payments on time

Your payment history makes up 35% of your total credit score. Miss even one payment, and you can see your score drop by a long shot — even if you’re just a few days late.

So, always, always, always make your payments on time. If you’re worried you’ll forget, automate them! Banks have tons of fancy features these days to help you “set and forget” your bills.

Read more: How to put your money on autopilot

Golden rule #2: Keep your credit card utilization low — aim for 30% or less

Another important factor in your credit score is credit utilization, which is the amount of credit you’re using compared to the total amount of credit you have.

For example, say you have a $1,000 credit limit. If your balance is $500, your credit card utilization is 50%.

You can keep your credit utilization low by only using a small portion of your available credit line. (Ideally, no more than 30%.) So, on a $1,000 credit limit, this means keeping your balance below $300. Anything over that will lower your score.

Read more: What’s your credit utilization ratio and how does it affect your credit score?

Golden rule #3: Only use your card for things you can afford

Credit cards can be a magical way to boost your credit and score free perks like travel rewards and cash back — but only if you pay your balance in full.

The average credit card interest rate is around 14.51%. And when you don’t pay off your balance, interest gets charged to your account — every. single. month.

Even small purchases can lead to you paying hundreds of dollars in interest. So, make a habit early on to always pay your balance in full.

6. Don’t apply for too many credit cards at once — space them out over time

One more pro-tip when building credit as a teen: don’t apply for too many credit cards at once. Doing so can hurt your credit score.

This is because each time you apply for a new card, the card issuer does a hard pull of your credit report. And hard inquiries can stick around for up to two years, dinging your score a few points.

Applying for too many credit cards can also make you look like a risky borrower. Lenders like to see that you’re able to manage your finances responsibly. And opening multiple credit card accounts in a short period of time can signal that you’re not.

Best practice is to wait around six months before applying for your next credit card.

Read more: How to use a credit card responsibly

7. Sign up for a free credit monitoring service like Credit Sesame

As you continue to build credit as a teenager, there’s one more thing you can do to really feel like a responsible adult: sign up for a free credit monitoring service.

Here’s why…

Your credit score is one of the most important numbers in your life. But it can be hard to track it and understand what all the different numbers mean.

That’s why services like Credit Karma and Credit Sesame are perfect for building credit as a teen.

  • They help you understand your credit score and rating.
  • They send you alerts when something changes on your report.
  • They offer tips and suggestions on how you can improve your score.

Plus, they’re totally free.

So, even if you’re just starting to build credit as a teen, signing up for one of these services can help you stay on top of your finances.

Read more:

  • Credit Sesame review
  • Credit Karma review


If you’re a teenager, it’s important to start building credit early — especially if you want to get the best rates on a loan for school or a new car. (A good credit score can even help you pay less for car insurance.)

So, pick an item or two from this list — whether it’s getting a credit-builder loan through Self or monitoring your credit score through Credit Sesame. Then, start building those good credit habits early on. Trust us, it’ll be worth it in the long run.

Featured image:Dean Drobot/Shutterstock.com

Read more:

  • Best credit cards for young adults and first timers
  • Budgeting for teens

Self Disclosure:
Self Financial compensates us when you sign up for Self Financial using the links provided.
All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.

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