How to Help Your Kid Build Good Credit

Take these steps now to make it easier for them to borrow for a car or home later

Tamara E. Holmes,

AARP

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Published July 15, 2025

a credit card and credit report illustration

Not having a credit score could prevent your kid from getting a car loan down the road.

AARP

Young adults are more likely than others to be “credit invisible” — meaning they’re unknown to the three main credit bureaus: Equifax, Experian and TransUnion. One study by Experian found that 2 in 5 Americans who are credit invisible are under the age of 25. The reason: Young people often have no lending history, so there’s no way for credit bureaus to rate their creditworthiness.

But not having a credit score could prevent your kid from getting a car loan in the future, or stop them from “leasing an apartment or getting the best insurance rates,” warns Rod Griffin, senior director of public education and advocacy for Experian. It could even hurt their job search, since some employers perform credit-report checks on prospective hires.

While some lenders have been known to target college applicants and students with credit card offers in the past, your child should take a more strategic approach.

Here are some ways you can help your child build good credit when they are a late teenager or young adult.

Pitch in for a secured credit card

If your child is 18 or older, consider helping them open a secured credit card, which requires a cash deposit typically between $200 and $5,000 and serves as a line of credit. If you provide the cash to fund the card — you’ll get it back as long as your child pays back what they borrow — your child can use the card to build a credit file, Griffin says.

Some lenders don’t require deposits to match the entire credit limit. For example, you may be asked to put down a refundable deposit of $49 to access a $200 line of credit.

Just make sure your child pays off the balance every month, since secured credit cards typically have high interest rates. According to LendingTree, these cards often have annual percentage rates (APRs) of 28 percent or higher.

Add them to your credit card

Making your child an authorized user on your credit card gives them access to it, providing credit bureaus with information to evaluate their borrowing habits and build a credit history.

This is one of the most common ways parents help their kids establish good credit. But if you go this route, make sure your credit card bill gets paid on time and in full every month, says Tom Quinn, vice president of strategic alliances at credit-scoring company FICO. Even a single late payment could hurt your child’s credit profile (and yours, too). And if your child runs up a big bill, “that high balance will appear on both users’ credit reports, potentially lowering their scores,” Quinn says.

Some card issuers let you set spending limits for authorized users so you aren’t left with a huge credit card bill to pay if they take on more debt than they can handle. Card issuers have their own rules when it comes to the minimum age for authorized users, but it typically ranges from 13 to 18.

Tip: Before making your child an authorized user, ensure your credit card company will report your child’s use to the credit bureaus. Not all of them do. For example, American Express sends information to credit agencies only for authorized users 18 and older, while Wells Fargo and Chase send information on all authorized users to credit bureaus regardless of their age.

Put a cellphone account in their name

Some credit bureaus allow people to build credit history in nontraditional ways. With your child’s permission, Experian Boost will track their payments for streaming services that are in their name. National Consumer Telecom & Utilities Exchange will report utilities, cellphone and cable television payments, provided those services are registered in your child’s name. If your kid is no longer living under your roof, Rental Kharma will report their rental payments to TransUnion and Equifax for a monthly fee.

Have them take out a credit-builder loan

Some lenders and credit unions offer a “credit-builder loan,” aimed at people with little or no credit history. When you take out a credit-builder loan — typically $300 to $1,000 — the bank typically holds the money in a savings account for you, and you pay off the loan in monthly installments over a set period, typically six to 24 months. When the balance is paid off, the money is yours. But these loans do come with a cost. Some lenders charge a one-time origination fee, and some charge interest.

Credit-builder loan offers can vary by lender. For example, Credit Karma offers a credit-builder loan that lets you cash out multiple times. Each time you make $500 in loan payments, that amount is transferred into your bank account. How much time you have to pay the loan can also vary by lender. For example, the Civic Federal Credit Union requires that loans between $500 and $1,000 be paid off in 12 months, while loans of $1,001 to $2,000 can be paid over two years.

Before taking out a credit-builder loan, make sure the lender reports the payment history to all three major credit bureaus.

Along with building a credit history, a credit-builder loan will teach your child how to get accustomed to making regular bill payments — a good habit to establish, says Margaret Poe, head of consumer credit education at TransUnion.

Explore student credit cards

If your child is in college and earning some income on the side, they may qualify for a student credit card. These cards typically come with no annual fees and lower credit limits, generally between $500 and $2,000. Their income doesn’t have to come from a job — scholarships, grants and even allowances might make your child eligible for a student credit card, depending on the issuer.

Set ground rules

Be clear about what you expect from your child before making them an authorized user on your credit card or helping them open a secured credit card, says Bobbi Rebell, a personal finance expert at Cardrates.com and author of Launching Financial Grownups: Live Your Richest Life by Helping Your (Almost) Adult Kids Become Everyday Money Smart. For example, “If your rule is that the credit card is only for emergencies, you need to define ‘emergencies,’” she says.

Freeze your kid’s credit

More than 6 in 10 U.S. credit card holders have been fraud victims. But one simple step can help shield your kid’s credit from criminals.

If your child is under age 16, contact each of the three major credit bureaus — Experian, Equifax and TransUnion — to freeze their credit, which will make it harder for someone to open a fraudulent account in their name. You may have to provide proof of your child’s identity and your relationship to them, such as a copy of their birth certificate.

If your child is 16 or older, they can request a credit freeze themselves.

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Tamara E. Holmes is a Washington-based writer and editor. She has written extensively about money, entrepreneurship and careers for more than two decades. Her work has appeared in such publications as USA Today, Working Mother and Essence.