How to Build Credit at 17

Excellent credit can be a powerful tool that can potentially help you improve your finances, get access to better financial products, save money on interest, and also save you from having to put down a deposit when opening utility or cell phone accounts. The benefits of a positive credit report and prime credit score are extensive. Discover the basics of how to build credit at 17 with these tips designed for teens and their parents.

For parents and teens aiming to understand the intricacies of building credit history early is important for future financial stability. This knowledge can form the cornerstone of one key aspect of financial responsibility for teens, equipping them with an essential tool for managing their future financial endeavors.

It’s important to understand that credit scores are more than just a number; it's a reflection of financial habits and reliability. With this understanding, teens can develop credit-building strategies that lay the groundwork for preparing for financial independence.

Save on interest and fees

Learning how to build credit at 17 not only sets a strong financial foundation early on but could also help in saving significantly on interest and fees in the future.

If you are a parent of a minor, 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 credit score, so it's never too early to start thinking about how you 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.

Why start building credit before turning 18?

Understanding how to build credit at 17 is essential because having an understanding before turning 18 can give young adults a head start in the world of personal finance, where credit scores and credit reports play a significant role in shaping financial opportunities. 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. It takes months to get a credit score ^[1] 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?

If you are wondering, “What age can you get a credit card?”, you are not alone. Most banks and credit card companies will not issue a new credit card or loan to a minor. So, how old do you have to be to get a credit card under your name? In the United States, minors generally cannot 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 card to a minor as an authorized user on a parent or other legal guardian’s account.

How to start building credit at 17

To build credit at 17, you would need to be listed on a credit-related account like a credit card or loan. You can’t build credit with a regular bank account like a checking account, savings account, or debit card. 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 cosign with them on a student loan.

Authorized users can take advantage of good credit from their parents

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

Credit cards are not typically issued jointly, which would make both individuals on the application responsible for the full account balance. Most creditors require one individual on the application, and that person is responsible for paying off the card's balance or any credit card debt that may build up.

However, that person can typically 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.

If the primary account holder keeps the balance low relative to their credit limit and always pays any credit card debt 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 stay below the credit card’s limit and keep credit utilization low. Check with your credit card issuer to see if they allow authorized users. Also, make sure they report authorized users to the major credit bureaus.

According to Experian, some of the top credit card issuers don’t have a technical minimum age requirement for a minor to be added to a parent or guardian’s account. Others have minimum ages of 13, 15, or 16 for a minor to be added to their parent or guardian’s account, alongside other requirements.

Checking your credit score and credit report at 17

Even if you’re still too young to buy a 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.

Bottom Line

Getting a positive start with credit can help teens establish a valuable asset for the future that could open up a world of access to better financial products and lower interest rates reserved for those with the best credit.

If you are thinking ahead about how you can help your teen (or yourself, high five if you are reading this before you turn 18!) build a positive credit history, you’re on the path to helping them get off to a good financial start. With an early focus on building good credit, your teen could can get in a better financial position from the start of their credit-building journey.

As a parent, what more can you do to help their financial future?

Sources

1. CapitalOne, ‘How Long Does it Take to Build Credit?’ https://www.capitalone.com/learn-grow/money-management/how-long-to-build-credit/

About the author

Eric Rosenberg is a former bank manager and corporate finance worker with a Bachelor’s degree and MBA in finance. See Eric on Linkedin and Twitter.

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Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).