The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

At What Age Can Your Kid Start to Build Credit? The Surprising Answer

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Family Finances
Reading Time: 3 mins read
credit application
11
SHARES
175
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Most of us know that you have to be at least 18 years old in order to sign a legally binding contract. But did you know that, under specific circumstances, your teenager could actually start to build credit and improve their credit rating prior to age 18?

For starters, realize that the type of credit in question, state and federal laws, as well as specific bank policies all play a role in determining the age at which someone can legally establish credit.

In most cases, those under 18 will be listed as co-signers or authorized users on the credit accounts of an adult who is already 18, or possibly 21 years of age.

Here are a few examples.

Your teen who is, say, 16 years old could get an auto loan, as long as you or another guardian or adult agrees to serve as co-signer on the car note. (Again, the age of the older adult must be either 18 or 21, depending on applicable state laws).

Then there are credit cards.

A teenager can obtain a student credit card or a secured credit card, or he or she can be added as an authorized user to a parent’s current credit card.

The benefit of these transactions is that you could help your child begin to establish credit in his or her teens.

I’m not suggesting that teenagers need to have credit at such an early age. But I do think that for responsible. mature teens, and for those who are headed off to college, it could be beneficial to help them learn how to manage credit wisely — particularly as they enter young adulthood.

Federal laws can also play a role in when your child can acquire credit. Credit card reform now requires most credit card applicants under the age of 21 to have a co-signer, unless the person can prove that he or she has a job (i.e. regular income) that would support credit card repayments.

The Citi Forward Card is one exception, and it’s specifically designed for college students. So even people age 18 to 21 get approved for this card without a co-signer.

Now, let’s take a quick look at student loans, especially since young people who are starting college generally go off to school at age 17 or 18. Any of these youths can – at least in theory – apply for and receive either federal student loans, which are backed by the U.S. government, or private student loans. Needless to say, such college loans also help to establish one’s credit rating.

In practice, though, a teenager applying for college loans must also out a FAFSA (the Free Application for Federal Student Aid) to be considered for a government educational loan. And that FAFSA will require information taken from the parent’s income, debts and assets.

Therefore, student loans for many teens and young adults are generally linked to an adult who is 21 or older.

And lastly, what about mortgages? Well, I don’t know any 18-year-olds who are homeowners – but they could take on homeownership.

That’s because mortgage lenders are forbidden from discriminating against a borrower as long as the individual is at least 18 or of legal age to sign a home loan contract in their state.

Needless to say, it’s one thing to strive to be a homeowner post-college or in young adulthood.

But a typical 18-year-old would probably face very long odds in providing the credit, assets and income requirements most lenders would want to see before approving a mortgage loan.

Tags: building creditFAFSAKids and Money
Previous Post

Important Car Lease Terms You Should Know

Next Post

The Fiscal Cliff Explained: What the Fiscal Cliff Means to Your Finances

Related Posts

extra cash

Ten Proven Ways to Make Extra Cash

by Guest Contributor

People are always searching for different ways to make some extra cash. With the cost of living rising and bills piling up, it can be hard to make ends meet. Luckily, there are plenty of creative and easy ways to generate additional income without having to work long hours or...

Small business african female owner smiling while turning sign for opening of cafe. Happy afro-american waitress entrepreneur in apron present sign on door

Buy Black: 20 Powerful Reasons to Support Black-Owned Businesses

by Lynnette Khalfani-Cox, The Money Coach

In February, you’ll see a lot of people on social media and elsewhere urging you to Buy Black and purchase goods and services from Black-owned businesses. And that’s great! Let’s normalize supporting Black entrepreneurs beyond Black History Month. But as the co-owner of a Black-owned firm for two decades (TheMoneyCoach.net LLC,...

AskTheMoneyCoach.com

4 Ways to Save or Make Money Without Leaving Home

by Lynnette Khalfani-Cox, The Money Coach

With remote work gaining in popularity and inflation hitting everyone's budgets, more people are staying home these days.  But how can you stay home and still make or save money? Here are four ideas to help you keep some cash in your wallet -- or generate extra money, all without...

bury a loved one

What to Do if You Cannot Afford to Bury a Loved One Due to COVID-19 

by Lynnette Khalfani-Cox, The Money Coach

Currently, the average cost of a funeral is between $7,000 and $10,000. While life insurance can help cover some of the expenses, not every insurance plan includes burial assistance. 

make a will

COVID-19 Reminds Us Of the Need to Make a Will or Trust

by Lynnette Khalfani-Cox, The Money Coach

Like most things these days, you can make a will online. But the question really is: should you create an online will versus having a will drawn up the traditional way – by using a lawyer?

SNAP Benefits

COVID-19: Getting SNAP Food Benefits While You’re Unemployed

by Lynnette Khalfani-Cox, The Money Coach

In this video, Lynnette shares information on available SNAP food benefits and resources to anyone that needs help.

The New Parent Guide to Planning for the Future

by Lynnette Khalfani-Cox, The Money Coach

The emotions of becoming a new parent speak for themselves and cannot truly be understood until you’re the person or couple experiencing this major life milestone. With the ups and downs, smiles and laughter, and utter chaos in between, it can feel overwhelming to navigate anything else fully while adjusting...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1369 shares
    Share 548 Tweet 342
  • What to Do if Your Spouse Stole Money From You

    1159 shares
    Share 464 Tweet 290
  • What to Do If You Can’t Afford to Leave Your Spouse

    1096 shares
    Share 438 Tweet 274
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    999 shares
    Share 399 Tweet 250
  • What Do All Those Strange Codes In My Credit Report Mean?

    808 shares
    Share 323 Tweet 202
  • Do This Now If Your Wages Were Not Reported

    736 shares
    Share 294 Tweet 184
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    713 shares
    Share 285 Tweet 178

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist