How Young Is Too Young for a Credit Card?
In the United States today, one’s credit score has a serious impact on his or her life. From renting your first apartment to applying for a home mortgage, your credit score is a vital factor across the board.
Here’s something to think about: 15% of a person’s credit score is based on the length of his or her credit history. That means that the earlier you open an account, the better your score will be, right?
Well… yes and no. Taken at face value, that statement is certainly true. That being said, we also know that young people might not always be as financially responsible as they’ll hopefully become later in life.
This all raises the question, “how young is too young for a credit card?”
According to the average American, the appropriate age to get one’s first credit card is twenty-two. But is that really the case? That’s what we here at Meritt.CO will be investigating in this article today.
Credit Cards for Minors
If you’re a minor yourself, bad news: there’s simply no legal way to open a credit account on your own. Sorry!
That being said, if you’re a parent or other guardian who’d like to get your child a head start on his or her credit journey, there is an option for you. You can add a minor as an authorized user on a credit card account that you already have.
By doing this, he or she will establish a credit file, boosted due to your good credit score. The other good news is that you’ll be able to monitor your child’s purchases, making sure that he or she is spending responsibly.
Of course, there’s also some risk. If your child makes an irresponsible purchase, you will in fact be on the hook for paying!
Credit Cards for Young Adults
If you’re between the ages of 18 and 20, you are eligible to open your own credit account. That being said, there are some strings attached.
In accordance with the Credit CARD Act of 2009, young adults must be able to demonstrate an independent stream of income in order to open an account independently.
Another option is to open an account with a co-signer who is 21 or older. In that case, he or she would have to demonstrate an income stream instead.
Once you reach 21, you’re considered a bona fide adult in the world of credit cards. No special rules apply past this point!
When it comes to establishing credit, the right age to open a credit card is as early as you can do so responsibly.
That last word is key.
The length of your credit history doesn’t matter quite as much if you miss payments or if your credit utilization is too high, both potential problems for irresponsible, young credit card users.
That being said, if you’re truly ready to use a credit card intelligently, there’s no arbitrary age that’s “too young!”