Even if your sixteen-year-old still has a lot to learn about the world, it’s never too early to start preparing her for the financial realities that she is going to face in adulthood. A good credit score follows your child around for life, and your teen can actually begin to build hers long before she leaves the nest. Here are four important ways that parents can introduce good habits while simultaneously bolstering a teen’s reputation with the major credit bureaus.

Educate Her While She’s Young

Good financial habits are rarely taught in schools. Your teen might be well informed about the intricacies of trigonometry and calculus while having no idea how to keep track of a personal bank account. It’s your responsibility as a parent, therefore, to take this element of your child’s education into your own hands. Invite her to pay the bills with you a few times and make sure that you are setting a good example about how to manage money. You can also explain the credit scoring process and pull your teen’s free report once a year to review with her.

Add Her to Your Credit Card

One of the simplest ways to start impacting your child’s credit history is to add her as an authorized user on one of your credit cards. Whether you insist that the card should only be used in emergencies or ask your teen to pay for daily lunches with plastic, you can keep track of her purchases and make sure that she understands the importance of responsible usage. Being on the account of a parent will start to establish a child’s personal credit history with the major reporting bureaus and will extend her “length of credit” in the future. Still, make sure that you only add your teen if you have good credit yourself, because blemishes and late payments will hurt your child as well as you.

Introduce Store Cards and Personal Credit Cards

When you think that your teen has proven herself to be trustworthy, you can help her open her first personal credit card. Start small by opting for a card with a low credit limit and ensure that your daughter pays off the full amount owed each month (getting in debt and paying interest is never a good idea at a young age). If you want a less risky card for your teen, opt for a store card that can only be used at a certain retailer. Often, these cards are easier for young people to get, and they also restrict spending locations.

Co-sign a Loan

A good history with loans can have a very positive impact on your child’s credit score throughout her life. Still, loans can be hard to get if your teen isn’t financially independent. By co-signing your child’s loan when she goes to buy a car or makes a similarly sizeable purchase, you can ensure that she gets a better interest rate and also closely monitor her payment habits. Plus, you will both see your credit scores bolstered as long as the loan remains in good standing.

Kids face a lot of pressures when they first enter the “real world,” and you can be sure your teen will stumble occasionally. Still, if you take a few simple steps to help your child establish good credit while she’s young, this may have a positive impact on her future job prospects, choice of places to live, and ability to make important purchases.

SonAriz Financial can help build your child’s credit with our personal loan, registration loan, or title loan products. Call or apply online to get a quote and talk to one of our friendly customer service representatives.

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