How to Build Credit for a Child Under 18

Building credit for a child under 18 requires careful planning, as minors typically cannot open credit accounts on their own. However, there are safe and legal ways to give them a head start on their credit journey.

Can Minors Have a Credit Score?

In most cases, individuals under 18 cannot independently open credit accounts. As a result, they usually do not have a credit score until they begin using credit themselves.

Authorized User Strategy

One of the most effective ways to build credit for a minor is by adding them as an authorized user on a parent’s or guardian’s credit card. This allows the child to benefit from the account’s positive payment history.

Choosing the Right Account

The account used for this strategy should have a strong payment record, low credit utilisation, and a long history. Poorly managed accounts can negatively affect the child’s future credit profile.

Teaching Financial Responsibility

Even if the child does not actively use the card, this is a good opportunity to teach budgeting, spending discipline, and the importance of timely payments.

Monitoring the Credit Profile

Check if the authorized user account is being reported to credit bureaus, as not all issuers report this information.

Avoiding Risks

Ensure that the account remains in good standing. Any missed payments or high balances can harm both the primary user and the authorized user.

Alternative Early Steps

Encourage savings habits, responsible debit card usage, and financial literacy. These habits prepare children for managing credit in the future.

Transitioning at Age 18

Once the child turns 18, they can open their own credit accounts. Having an authorized user history may give them a strong starting point.

Common Misconceptions

You cannot open a credit account directly in a minor’s name. Any attempt to do so may be considered fraudulent.

The Bigger Picture

Building credit for a child under 18 is about laying a foundation. By using authorized user strategies and teaching responsible financial habits, you can help them enter adulthood with a strong and healthy credit profile.

Credit scores are indicative and subject to change. Stashfin is an RBI-registered NBFC. A credit score does not guarantee loan approval. Terms vary by applicant profile.