Posted Jul 27 2010 by Marc Chase
It’s been a long-held belief of mine that every high school in this country needs to start including classes to teach kids about credit and personal finance. If they’d been offering these types of courses back when I was in high school, there’s a pretty good chance we wouldn’t be in the financial snafu we’re in right now, with half the country in need of a way out of credit card debt and the other half continuing on like nothing’s wrong (Okay, that’s generalizing things a bit, but you get the idea).
Back in my day, when I was a fresh-faced 18 year old out of high school, creditors seemed to be falling all over themselves for the chance to give to give me my first credit card, usually with a limit of up to $5000 (oh the ways I could spend that…) and some useless trinket as a sign up bonus. Things are a little different now, the biggest change-up being that banks are no longer allowed to issue credit cards to anyone under the age of 21, unless the person applying has a cosigner or can provide proof of sufficient income.
Now, I’m sure that probably sounded sensible to whoever came up with the idea, but back here in reality, it doesn’t make any sense at all. Not only does it serve to stave off any experience a younger generation will have with credit cards, but with a decent percentage of your credit score (15%) made up of the length of items in your credit history, having to wait until you’re 21 to start building up your credit is like being held back two grades for no discernible reason.
So what’s a responsible teenager (responsible enough, anyway) to do if they want to get ahead in the game and start establishing credit before their 21st birthday?
Try out any or all of these simple tips:
• Get a secured credit card. Think of a secured credit card as a set of training wheels; not quite a credit card, but more than a debit card. You can get one from your bank after depositing some funds into the new account, and then use it just as you would a real credit card, making regular monthly payments. Be sure to look for cards that offer lower interest rates than others; you don’t want to fall into the trap of barely paying the interest off this early in the game.
• Get a job. If you’d rather jump head first into the pool, look for a decent part time job (or full time if you’re out of high school and want to wait a year or so before heading to college) to increase your chances of getting a credit card before you’re old enough to (legally) drink. After all, being able to provide proof you’ve got a decent income that can be used to pay down a card balance is like doing extra credit assignments – it can only help in the long run.
• Piggyback on Mom and Dad’s card(s)! Assuming either of your parents have credit on their own, and that it’s good, you can always try and hop onto their card and share in their good fortune. Of course, if your parents start to slip up on their own credit, it’ll extend to you as well, so make sure your parents are better with money than you might be.
View the Original article
