What Is A Good Credit Score For A Teenager – 10 Tips To Help People Choose The Right One
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So how can you get a credit card and start building that history as a teenager? Well, we have to split this into two categories because if you are currently 18 or older then you can just go open up a credit card in your name and start using it for your regular everyday purchases and then paying it off every month, allow me to repeat that just in case you missed it paying it off every month and this will allow you to build a pretty great credit score in a relatively short period of time. Now even though legally you are able to get a credit card, this can be a little bit tricky since you probably don’t have any credit history so if you are over the age of 18 and you’re just looking for the recommendations I would give for your very first credit card then I’ll tell you right now the card that I recommend when you are just getting started is the Discover It card.
But what about those of you who are under the age of 18 and you cannot legally open up a credit card in your own name by yourself? Well sadly there isn’t some magic loophole that is going to get around this and laws are laws and they are there for a reason as frustrating as that may be however you are not completely out of luck and what you may not know is you can actually build a credit history as a minor. Granted this is very rare and uncommon just because at that age usually your parent or guardian is covering a significant portion of your expenses not to mention the fact that you’re not able to borrow any money on your own however you absolutely can have credit history before turning 18. So if you’re under the age of 18 and you want to have a credit card then there’s really only one serious option on the table and that would be convincing your parent or guardian to make you what’s called an authorized user on their credit card.
By being an authorized user as a minor on your parent or guardian’s card, you’re learning how to use it responsibly and building that mentality that just because it is credit does not mean that you aren’t spending money. I know that probably sounds ridiculous to some of you but it is so important that you associate swiping your credit card with money coming out of your bank account because you’d be surprised how often people disassociate these two things. Secondly, using a credit card as an authorized user will actually help build your own credit history which is a largely unknown fact. And what this means for your parent or guardian is when the time comes for you to go get that first car or rent your first apartment, they might not have to necessarily be a cosigner on that loan or lease agreement if you yourself have already established good credit history.
So if you are already 18, what are the best options as far as your very first credit card because your options are going to be limited since you have a limited credit history or no credit history at all. Well as I mentioned earlier in the video, my personal suggestion and my very first credit card was the Discover it card. This is going to currently give you 5% cashback on rolling categories, 1% cashback on everything else. The second great option for a beginner or more intermediate card is going to be the SoFi credit card. This is actually the newest offering from SoFi and this card is currently going to give you 2% unlimited cashback on everything.
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I am not a Certified Financial Planner®. The topics presented in this video are for entertainment purposes only. You, and you alone, are responsible for the financial decisions that you make.