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Everything high school students need to know about building credit

College • May 13, 2019 • Winnie Sun

What you’ll learn

  • What credit is
  • How to build it
  • How parents can help

5 Ways to Start Building Credit from Winnie Sun | Sallie Mae®

As a financial advisor, I work with clients every day who want to coach their kids to become financially savvy. One important topic is credit, especially for high schoolers. Here are my top tips for teens who want to build their credit.

What is credit?

Let’s start with some definitions. Credit is what allows you to buy something today knowing that you're going to have to pay it back later. Your credit score is a three-digit number that evaluates how likely you'll be able to pay back a loan or a credit card.

A great credit score can come in handy when it's time to take out a loan for college, a car, or home later on in life. Even if you can't get your own credit card quite yet, there are five ways teens can start building credit right now.

How to start building credit

First, learn the components of your credit report and really get comfortable with maintaining a good rating.

A secured credit card allows you to make a cash deposit, which then serves as your credit line. Let's assume you put $500 in the account. You can then charge up to $500. Make a plan for expenses you'd like to charge on the card, such as gas or movie tickets. Just make sure you pay your balance in full every single month before the due date.

If you have a parent or relative with good credit, ask if you could become an authorized user on their credit card.

The three national credit bureaus (Equifax, Experian and TransUnion), all have their own reports on you and each of the reports can be slightly different. So, review all three of them at least once every year.

Finally, talk to your parents about their credit. Have them explain what they're doing right. What pitfalls to avoid and what they look for when reviewing their own credit reports.

It’s never too early to get financially savvy

Building credit while you're still in high school is not just a smart idea, but an easy one too. The sooner you understand what it is, how it works, and why it's important, the sooner you can become financially prepared for the future.

Winnie Sun is a financial advisor and founder of Sun Group Wealth Partners, a financial consulting firm. She has nearly two decades of experience in money management, speaks at conferences across the country, and frequently appears on CNBC and Fox Business.

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Sallie Mae does not provide financial, tax, or legal advice and the information contained in this article does not constitute tax, legal, or financial advice. Sallie Mae does not make any claims, promises, or guarantees about the accuracy, completeness, or adequacy of the information contained in this article. Readers should consult their own attorneys or other tax advisors regarding any financial strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Sallie Mae.

Please note, Winnie Sun was compensated by Sallie Mae for this article but the views and opinions expressed herein are her own.