Building a strong financial future for your child starts with understanding the importance of credit. As a parent, teaching your child about credit and helping them build a solid credit foundation early on can set them up for financial success in the future.

But how can you get started, and how early is too early? Read on to learn more.

What are the benefits of starting early?

Starting the credit-building process early for your child has many advantages. Teaching her about credit is not just about explaining numbers and scores; it's about instilling a sense of financial responsibility and understanding that will serve them well throughout their lives.

Firstly, starting early gives your child a longer credit history. In the credit scoring world, a longer credit history provides more data for lenders to assess creditworthiness. It shows that your child has been able to manage credit over a significant period, which can lead to higher credit scores.

Secondly, it allows for mistakes. Learning about credit and financial responsibility is a process, and mistakes are part of that process. Starting early provides your child with a safety net. If she misses a payment or overspends, it can be seen as a learning opportunity rather than a financial disaster.

Thirdly, it prepares her for larger financial decisions in the future. Whether it's taking out a student loan, buying a car, or renting her first apartment, having a solid credit history can make these processes smoother and potentially more cost-effective.

Lastly, it can lead to better financial habits. Understanding the importance of timely bill payments, responsible spending, and the impact of her financial decisions on her credit scores can encourage healthier financial habits.

How to start building credit for your child

Depending on how old your children are, chances are they’re not paying their own bills just yet. However, there are still some ways you can help them get off to a good financial start.

Educate your child about credit

The first step is education. Your child should learn that a credit score, a three-digit number ranging from 300 to 850, is a quantitative measure of her creditworthiness. She should know the factors that determine her credit scores: payment history, credit utilization, the total amount of debt, length of credit history, types of credit, and recent credit inquiries. Also, she should understand that building a good credit score doesn't happen overnight. It requires consistent and responsible financial behavior over time.

Discuss the role of credit in everyday life, and make sure your child understands the consequences of poor credit management.

Open a savings account

Encourage your child to start saving early. Opening a savings account in her name can be a great way to teach her about the importance of saving, earning interest, and managing money. To incentivize saving, consider contributing to her savings account as she meets different savings milestones.

While teaching her to put money in savings might not directly impact her credit score, building these healthy financial habits can help them make good choices with her money once she does have access to lines of credit.

Consider a secured credit card

Once your child is old enough, consider getting her a secured credit card. These cards require a cash deposit that serves as the credit limit. They're a great way to teach your child about responsible credit card use, as she can only spend as much as she (or you) has deposited. Plus, it’ll help her begin to build a credit score.

Co-sign on a loan or credit card

If you're comfortable with it, co-signing on a loan or credit card for your child can help them start building credit. However, remember that you'll be equally responsible for any debt incurred.

There are two ways you can do this. First, you can co-sign on your child’s own credit. They’ll still be responsible for their payments, but your presence on the loan can act as a fail-safe, potentially getting them better loan terms.

Second, you can have your child co-sign onto your credit accounts (such as an auto loan). This ensures that the payments still remain your primary responsibility, but your child can benefit from your on-time payments. This can be a great option, but remember that your payments can affect your child’s credit, so it’s important to prioritize making on-time payments.

Add your child as an authorized user

Adding your child as an authorized user on your credit card allows her to benefit from your credit history. Additionally, your child will get her own credit card, which she can use to access your line of credit and begin building good financial habits.

You can add children as young as 13 for many credit card issuers, and some will accept children even younger in age. However, ensure that you continue to use your credit responsibly, as any negative activity will also affect your child's credit. Also, your child’s activity has the potential to impact your credit score, so it’s important to make sure she’s using it responsibly.

Encourage healthy financial habits

If your child has any bills in their name, such as a cell phone bill, encourage them to pay these bills on time. Timely bill payments can positively impact their credit score, depending on whether or not the institution reports your payments to a credit bureau.

Regularly review your child's credit report with them to check for any errors and to understand their credit status. This can also be an educational experience for your child, as they can see firsthand how their financial habits affect their credit.

Consider a student credit card

Using a student credit card can be helpful for several reasons. For instance, these cards are tailored to the unique financial needs of students and offer perks such as low or no annual fees. Plus, they can help students build a positive credit history.

Additionally, student credit cards often come with cashback rewards, discounts on educational expenses, and fraud protection. These perks empower students to manage their finances responsibly while enjoying valuable benefits.

Introducing Vital Card

Building credit for your child involves more than just understanding the basics and starting early. It requires the right tools, and this is where Vital Card comes in.

Vital Card is not your average credit card. It's a tool designed to help users build credit while teaching them about responsible spending. Vital also encourages users to share the benefits of the card with others and rewards them for doing so through its unique cash rewards system.

Through Vital’s referral rewards program, cardholders grow their Vital Scores based on referrals, or “Vital Connections.” A higher Vital Score means users receive a greater share of the company's referral rewards, which come in cash, each month.

But the benefits don't stop there. Good spending habits can also lead to improved credit scores and credit health rewards. This can help set up cardholders for financial success in the future.

Moreover, higher spending on the Vital Card results in more cash back. For instance, when cardholders sign up five or 10 people within a 3-month referral window, they qualify for 2 or 3% cash back, respectively, for the following three months, instead of the minimum unlimited 1.5% cash back on all spending that otherwise applies.

In short, Vital Card is more than just a credit card. It's a financial education tool that rewards your child for responsible sharing and spending, setting them up for a future of financial success.

The bottom line

Building and maintaining credit for your child is an investment in their financial future. By teaching them about credit, helping them start building credit early, and introducing them to tools like Vital Card, you're giving them a financial head start. Start today to help set your child on the path to financial success.


Best Credit Cards for Teens of 2023 | Experian

What is a credit score? | Consumer Financial Protection Bureau

Why Do You Want a Good Credit Score? | Experian

How Does Length of Credit History Affect Your Credit? | Experian

What Factors Can Negatively Affect Credit Scores? | Equifax®

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.