As your child becomes an adult, a good credit score and an established credit history are crucial for financial independence. Once they turn 18, they are eligible for various forms of credit, such as credit cards, overdrafts, student loans and ‘buy now pay later’ (BNPL) options. If you want your children to get the best start in life, helping them to build up a credit history is important.
The question is, at what age should you start building up a credit history and how do you do it? Discover everything you need to know in this useful guide.
Related: How old do you have to be to get a credit card?
Why you should help your child build a credit history
Building up your child’s credit history early on can deliver great benefits. Most importantly, it helps to give your child full financial independence. If they have a good credit history when they reach adulthood, they will find it easier to:
- Get accepted for finance
- Rent or take out a mortgage
- Get cheaper interest rates on credit
These are the main reasons to start building up your child’s credit history. The question is, when can you start building it up?
Related: Ways to help your teenager build credit
At what age can children start building a credit history
Children can typically start to build up a credit score at the age of 18. However, you may have seen that adding a child to your credit card can help them to build up a good credit score from the age of 13. Unfortunately, this isn’t true.
While adding your child as an authorised user on your credit card can offer some benefits, it won’t help them develop a credit history. This is because the main cardholder is the one responsible for making repayments. So, unless your child is the main account holder, any payments they make won’t be recorded on their credit report.
So, children can’t start building up a credit history from the age of 13. However, there are things you can teach them before then that will help when the time comes to start building their history.
What to teach kids before building their credit history
If you want to prepare your child to help them build up a good credit history, there are a few things you’ll want to teach them before they turn 18. Here are some of the things you’ll want to touch upon:
- Money management
- Good saving habits
- Credit lessons
- The importance of tracking finances
Ideally, your child should have great financial literacy by the time they reach the age of 18. Teach them everything they need to know about credit reports and ratings, including what is included in the report and what isn’t.
Teaching them good savings habits will limit their reliance on credit in the future. It also teaches them to have a healthier relationship with money. Giving them credit lessons will also help as it introduces your child to how borrowing works and what they should avoid.
If you teach your children about credit and money management, they will know how to build up their credit history quickly.
Ways to help build my child’s credit history
If you want to help your children build a good credit history, here’s what you will want to do:
Get them used to handling money with a prepaid debit card
One of the main ways to build up a credit history is to apply for and use a credit card. As the repayments are made, it shows they can be trusted to have and manage credit. This builds up both credit history and credit score. Credit cards are available once your child has turned 18.
To ensure your child doesn’t get swept up in the excitement of having a line of credit when they turn 18, get them used to financial independence early. One way to do this is to give them their own kids' debit card. By giving them a card, like the GoHenry prepaid debit card, they will gain experience with budgeting and actually using a card. By the time they can apply for a credit card, they will have a good idea of how to manage it.
Related: Does a debit card help build credit?
Teach them good credit habits
Of course, one of the best ways to ensure your child builds up a good credit history is to teach them good credit habits. Make sure they know the dangers of not making repayments on time, and that they aren’t spending more than they can afford to pay back.
If you can teach your child good credit habits, it sets them up to use credit more responsibly by the time they turn 18.
Get them registered on the electoral roll
Did you know your child can be registered on the electoral roll when they are 16? According to credit bureaus, being registered on the electoral roll has a positive impact on your credit rating. It is largely used for verification, proving you are who you say you are.
By registering them on the electoral roll, it can help your child get a head start on building up their credit history.
Start a lifetime of financial education with GoHenry
If you want to help your child build up a credit history, sign them up for a lifetime of financial education with Go Henry. For a low monthly membership fee of just £2.99, your child will get their own prepaid debit card and make use of in-app Money Missions, which is included in the membership fee.
Through our app, your child will learn about earning, spending, saving, budgeting, and investing.
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