Helping Your Teen Build Strong Credit Habits: A Guide for Parents

As a parent, you want to equip your teen with the tools they need for a successful financial future. One of the most important lessons you can teach them is how to build and manage credit responsibly. While your teenager might not be thinking about credit just yet, the habits they develop now can have a lasting impact. Here are some practical tips to help guide your teen as they begin their credit journey.
 

1. Start with the Basics: Explain What Credit Is

Before diving into the specifics, it’s essential to help your teen understand the basics of credit. Explain that credit is the ability to borrow money or access services with the promise of paying back later. Their credit score—a three-digit number—reflects how reliable they are in repaying borrowed money. A higher credit score can open doors to better financial opportunities, such as lower interest rates on loans.
 

2. Encourage Them to Open a Bank Account

A checking or savings account is a great starting point for financial responsibility. While these accounts don't directly affect their credit score, managing them responsibly teaches your teen valuable skills like budgeting, tracking spending, and saving. A well-managed bank account lays the groundwork for good financial habits that will benefit them when they start using credit.
 

3. Consider Adding Them as an Authorized User

One effective way to help your teen start building credit is by adding them as an authorized user on one of your credit cards. This allows them to benefit from your good credit habits, such as paying bills on time and keeping balances low. It’s important to set clear expectations about how the card will be used to ensure it’s a positive experience.
 

4. Teach Responsible Spending Habits

Encourage your teen to only spend what they can afford to pay off each month, whether they're using a debit card, prepaid card, or an authorized user card. Emphasize the importance of avoiding impulse purchases and sticking to a budget. These responsible spending habits will help them manage credit wisely as they move into adulthood.
 

5. Monitor Their Progress Together

As your teen begins their credit journey, take time to review their financial activities together. Discuss any changes in their bank account, credit card use, or spending habits. This ongoing conversation will help reinforce the importance of good financial practices and allow you to guide them through any challenges they may encounter.
 

By teaching your teen these fundamental credit habits now, you’re setting them up for a brighter financial future.
To learn more about helping your teen navigate their credit score, speak to one of our C&N experts. We also do house calls! We encourage teachers or organization leaders to fill out our C&N Speaker Series form to get a C&N teammate to speak to your group. Our Get Smart About Credit presentation is designed specifically for young adults, and we enjoy helping them on their financial journey.