Credit now, Credit for later

Disclosure:  Thanks to Becky Wilcox, site supporter, for this post.

The question has been asked, “when is the right time to build credit?” The answer is simple: now. As children we are told to keep our credit stable and high because it will control our lives and the things that are in it. Whether we’re buying a car, getting a cellphone, an apartment, and even things as simple as our first brand new mattress, credit qualifies us for life. Bad credit is something that, like creditrepair.com says, makes life hard to live. It’s important, then, that you teach your kids from an early age to build good credit. Here are some ways to do that.

The first easy way to start building credit at a young age is with a gas card. For most 16-year-olds the biggest part of freedom is, in fact, a vehicle. And what powers this car? Think about it: GAS. FUEL, the cash eating liquid. Call it what you will, but whatever you call it, it is not cheap. Some teens start working earlier, which can help pay for this credit card’s monthly bill. But, as the parent, in the beginning, you will probably pay for most of the gas yourself. Why not get a simple gas card to cover those charges and each month pay it off? Once the teen gets the big J-O-B then you can negotiate with him or her and maybe he or she can hand over the minimum payment monthly to start developing the habit of paying monthly payments on bills. Easy. That’s the first step of possibly starting a good credit pattern.

Second, if you are in the market to finance a car for your teen, and if they are going to be the primary user of this car, think about putting both names on the lease or title of this car. That establishes a large investment at a young age. Making those monthly payments will help build that credit and establish the habit of making monthly payments. These steps all help build credit.

One last way to help a young adult build some credit is with a cell phone. Maybe when they are 17 you can get them on a plan of their own and help them manage the monthly payments. What kid is not dying for a new cell phone? It’s not the biggest part of credit but it is a beginning step that can possibly help motivate them because, without that monthly payment, they will lose the connection with the world that they are so attached to. See? Motivation! Cell phone contracts help develop credit and can sometimes require a deposit, but that’s the cost of having a stable future. That is what the goal is with a solid credit score. A stronger, better future.

The point is this, get ahead of the game and anticipate that sometimes your child is going to struggle with payments and have issues. That is expected, and the more questions they have, the better. And lastly, do not underestimate what he or she can do. They understand that life ahead is unknown and difficult.

Have a conversation with your child about the importance of credit will help lock in all of these steps solidify why you are taking them. Credit is not child’s play and having that knowledge engraved in your teen’s head can only help them build a better future for themselves.