6 Ways to Teach Kids About Credit

6 Ways to Teach Kids About Credit

Your credit score is one of your most important assets, and having good credit makes many things easier for you throughout your life. Teaching your kids about credit will help prepare them for life as an adult. Like most parenting, you'll need to teach your kids about credit many times over the years, tailoring the discussion to the age and maturity of your child.

Credit scores explained

There are two main types of credit score — FICO and VantageScore. These scores are both calculated from publicly available credit information about you and range from 300 to 850. Your credit score is determined by various factors, including how you use your existing credit, the mixture of different types of credit you have, and how you pay your bills.


Your credit score plays a part in many vital parts of your life. It will help determine the interest rates that you might qualify for on a mortgage or auto loan. Many landlords will look at your credit score when you are renting a home. Some employers may also use that information when you are applying for a job. Having and keeping good credit will make your life a lot easier.

Teaching kids about credit

Many young adults go off to college or start living independently and make credit mistakes that have consequences that can last for years. Teaching kids about responsibly using credit while they are younger can give them a solid financial foundation. Here are six ways to teach kids about credit:

1. Talk about when to use credit

Let your kids see how you do and do not use credit. Sometimes it makes sense to use cash, like if the merchant offers a discount or doesn’t have enough money in your account.

2. Show real-life examples

When you're making a large purchase, talk about your interest rate and how your credit score affected the rate you currently have on your credit card.

3. Consider an allowance

Set your kids up with an allowance or offer them a chance to earn money for extra chores around the house.

4. Start a simple budget

With the money they've earned, help them set some aside for savings and budget the rest for things they wish to buy.

5. Offer incentives

Offer incentives if your child uses their money responsibly. One example could be matching the amount that your child chooses to save, similar to an employer's 401(k) match. Incentivizing behavior can start reinforcing good financial habits early on.

6. Money doesn't grow on trees

Remind your kids that a credit card is not "magic money" — they should only use it for purchases for which they already have the money.

How to Build Credit For Your Child

Even before your child turns 18 and becomes eligible to apply for credit cards in their own name, you can help them get a kids credit card. One way to do this is by adding them as an authorized user on your own credit cards. The age limits to add someone as an authorized user vary by banks, but many banks require that authorized users are at least 13 years old. Once your child is an authorized user on your credit card, your on-time payments will help them build their own credit report.


GoHenry can play an important part in teaching kids about how to use credit. While cash is great for being hands-on and easy to understand, the reality is that most purchases are made via credit and debit cards. GoHenry is different than a bank account, but has some similarities. Most importantly, it will put you as the parent in control of where, when and how much your child can use their card.


The ultimate goal: Helping your child cultivate good money habits. Learning how to responsibly use credit is a big part of that. Setting them up on a firm financial foundation will be especially helpful when it comes time for them to establish a good credit profile of their own.

Written by GoHenry Published Nov 8, 2021 ● 3 min. read