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A high credit score can significantly improve your financial situation—from qualifying for a loan to lower interest rates and other financial opportunities. If you're a parent, teaching your children how to handle credit responsibly is critical to helping them build a healthy financial foundation for later in life. Here are a few options to help your child build credit early and manage money responsibly.

1. Add Your Child as an Authorized User on Your Credit Card

parent teaching child how to use credit card
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One of the easiest ways for your child to start building credit is to add them as an authorized user on your credit card as long as they meet your credit card issuer’s age requirement. Your child will have a card linked to your account as an authorized user. While authorized users can use the credit card just like the primary cardholder, they have no legal liability to pay off the debt.

Some credit card companies report authorized user activity to the credit bureaus, such as credit limit, the amount of credit used, and payment history. If no payments are missed, and the card is used responsibly, the authorized user could raise their credit score while learning good credit habits. However, missed payments or maxing out the credit card could have a negative impact.

Recommended Credit Cards

Credit Card Rewards Rate Annual Fee Bonus Offer Learn More

Chase Sapphire Preferred®

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Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.

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Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠. Dollar Equivalent: $1,725 (75,000 Chase Ultimate Rewards Points * 0.023 base)

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Earn 3 points for every $1 on Southwest Airlines® purchases, 2 points for every $1 on Rapid Rewards hotel and car rental partners, 2 points per $1 on local transit and commuting (including rideshare), 2 points per $1 on internet, cable, and phone services; select streaming, and 1 point for every $1 on all other purchases.

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Earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening. Dollar Equivalent: $700 (50,000 Southwest Rapid Rewards Points * 0.014 base)

Wells Fargo Active Cash® Card

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Earn unlimited 2% cash rewards on purchases.

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Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

Citi Custom Cash® Card

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Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter. Also, earn unlimited 1% cash back on all other purchases. Special Travel Offer: Earn an additional 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal through 6/30/2025.

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Earn $200 in cash back after you spend $1500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® points, which can be redeemed for $200 cash back.

2. Get a Credit Builder Loan

Another option to help your child build their credit is with a credit builder loan. A credit builder loan usually doesn’t require any credit history, as they’re specifically designed to help build credit. Credit builder loans can give your child the opportunity to prove that they can consistently make timely payments.

The lender deposits a small loan into a savings account that’s paid back over six to 24 months. Credit builder loans are typically between $300 and $1,000, according to the Consumer Financial Protection Bureau. These payments are reported to the credit bureaus and held as collateral until the loan is paid in full. At the end of the loan term, your child can access the full loan amount.

Credit builder loans only help if payments are made on time every month. If a payment is missed or late, then the lender could report this to the credit agencies.

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3. Co-Sign on a Loan

Being a co-signer on a loan can also help your child build a credit history. Even if you’re making all of the payments, it will still appear on their credit report. However, some lenders may not accept a minor as a borrower, even with a parent as a co-signer on the loan.

While co-signing on a loan can potentially help your child improve their credit score, it comes with risks. Once you sign the contract, you’re legally responsible for the entire loan amount if your child cannot pay.

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4. Help Your Child Choose a Starter Credit Card

If your child is at least 18, they can get their own credit card to start building credit. It requires a lender to run a credit check, so if their credit history is sparse, it may limit their options when it comes to cards. Your child may have better luck getting approved for a secured credit card or a student credit card

Because cardholders are required to make a small security deposit with the lender, secured credit cards usually have more lenient requirements. If the card is managed well, the deposit is refunded. Student credit cards also come with flexible qualification requirements, but they typically come with lower credit limits until it's proven that they are responsible cardholders. They will also need to show proof of income until the age of 21.

Recommended No-Annual-Fee Credit Cards

Credit Card Intro Bonus Rewards Rate Learn More
Citi Double Cash

Citi Double Cash® Card

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Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.

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Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.

Chase Freedom Unlimited®

1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.

1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

Wells Fargo Active Cash® Card

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Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

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Earn unlimited 2% cash rewards on purchases.

Wells Fargo Autograph℠ Card

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Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value. Dollar Equivalent: $200 (20,000 Points * 0.01 base)

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Earn unlimited 3X points on the things that really add up - like restaurants, travel, gas stations, transit, popular streaming services, and phone plans. Plus, earn 1X points on other purchases.

5. Teach Them How to Manage Their Finances

Financial education is essential when preparing your child for life and helping them build a solid credit score. Teaching money management skills and financial literacy as early as possible, whether at the grocery store or by putting money into a savings account, helps ensure that these habits become a part of your child’s daily life. 

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JN

Josephine Nesbit

Josephine Nesbit is a real estate and finance writer from New England and is currently based out of the Midwest. She has experience writing about real estate market trends, mortgages, real estate investing, debt, saving money, student loans and more. Her work has appeared in several publications, including Fox Business, GOBankingRates, Bankrate and U.S. News & World Report. When she’s not working on her freelance writing business, she’s outside spending time with her three young children. You can visit her website here or connect with her on LinkedIn to learn more about her.