How to Build Credit at 17

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By Eric Rosenberg, MBA

If you are a parent of a quickly growing young adult, or a 17-year-old yourself getting ready to manage your finances on your own, it’s a perfect time to think about credit. It can take years of steady on-time payments to build a good to excellent credit score, so it’s never too early to start thinking about how a teen can get on track for a positive future with credit.

If you are looking to help your teen build credit history or start building your own credit before hitting your 18th birthday, there are several good available strategies. Following these steps will help you establish credit at 17 in a way that offers benefits for decades to come.

Why start building credit before turning 18?

Credit scores and credit reports are an important part of personal finance.

There are 2 major reasons to start building credit as soon as possible though:

  1. A good credit score can be the difference between getting approved for a new credit card or loan by a lender and getting rejected. If approved, good credit can help you qualify for the best interest rates, which can save you tens of thousands of dollars on a future mortgage, for example.
  2. Building credit takes time. While you can ruin a credit score in an instant, it takes months to get a credit score and years to build a very good one. That’s why it’s a good idea to start building credit early.

Can you get your own credit card or loan at 17?

Most banks and credit card companies will not issue a new credit card or loan to a minor. In the United States, minors are generally not allowed to enter into legal agreements, which means young adults under 18 can’t open their own borrowing accounts.

Some credit card issuers may be willing to issue a new account to a minor who cosigns with a parent or other legal guardian. But otherwise, unless you are legally emancipated, you probably can’t open a credit card or a loan at age 17 with most issuers.

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

To start building credit at 17, you would need to be listed on a credit-related account like a credit card or loan. Contrary to popular misconceptions, you can’t build credit with a regular bank account like a checking account, savings account, debit card, or just getting a job. It takes credit to build credit.

One of the best ways for a teen to build credit is as an authorized user of a card owned by their parents–more on that in the next section.

The other option would be to help the teen open their own credit card or loan, which may be very challenging, or cosign with them on a personal loan, student loan, or another type of loan if they qualify.

Authorized users can take advantage of good credit from their parents

There’s a secret weapon when it comes to helping your family build credit that you can tap into if you have good credit of your own. There’s a feature of most credit cards that allows you to add what’s called an authorized user to your credit card account.

Unlike some loans, most credit cards are not issued to two people. They put one name at the top of the application, and that person is primarily responsible for paying off the card’s balance.

However, that person can add family members or anyone else they trust as an additional user. That authorized user gets their own card with their name on it, but it’s tied to the same credit card account.

When you’re an authorized user, that credit card account shows up on your credit report. A note says you are an authorized user, which tells lenders you are not legally required to pay for the loan’s balance. But otherwise, it looks like a regular credit card account and influences your credit score.

If the primary account holder keeps the balance low relative to their credit limit and always pays on time, authorized users should see the credit card help their credit rating. But if there are late or missed payments, that account can hurt their credit.

That’s why it’s so important to use this feature with care. Check with your card issuer to see if they allow authorized users. Also, make sure they report authorized users to the major credit bureaus.

Checking your credit score and credit report at 17

Even if you’re still too young to buy a cigar or lottery ticket, you are never too young to check your credit. While many minors will find they don’t have a credit report or credit score established, those who do can check their credit just like an adult.

The government-mandated website to get your credit report for free is AnnualCreditReport.com. You can also look to free tools from Credit Sesame, Experian, or other trusted services that offer more insights into your credit, including your credit score.

Preparing for a positive future with credit

It’s easy for adults to blame their bad credit for financial problems they are experiencing, but it’s likely that their bad credit is a result of other financial challenges.

Getting a positive start with credit can help teens establish a valuable asset that opens up a world of useful financial products and the savings of lower interest rates reserved for those with the best credit.

If you are thinking ahead for how you can help your teen (or yourself, high five if you are reading this before you turn 18!), you’re making a very smart decision. With an early focus on building good credit, your teen could save tens of thousands of dollars while staying in a position where they can financially thrive.

As a parent, what more can you ask for?

About the author

Eric Rosenberg is a former bank manager and corporate finance worker with a Bachelor’s degree and MBA in finance. His work is featured at Business Insider, Credit Karma, The Balance, Investopedia, and many other websites and publications.

Written on September 1, 2020

Self is a venture-backed startup that helps people build credit and savings.
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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