As a young person, establishing credit is one of the most important things you’ll do for your financial future.

  • Authorized user is a good way to start
  • Secured cards are another option to limit spending
  • Retail cards easy to get, but be careful!

“If I want a house, if I want to get a car, if I want any of these things, I need credit,” said 21-year-old Samantha Spavale, a student at the University of South Florida.

She’s absolutely right. Having good credit can even impact your ability to get a job these days.

“A lot of employers are now pulling credit reports," explained Juan Menendez, a credit counselor with Solita’s House in Tampa. "They want to see your credit history and your spending habits.”

You have to be 18 to legally get a credit card on your own, but it can be tough to qualify, especially if you don’t have an income.  So many young people look to Mom and Dad to help jump-start their credit history.

Getting Started

Spavale got her first credit card at age 18.

“I got one with my mom, and I had a spending limit of about $300,” Spavale said.

Parents can open a joint account with their child, but you have to be careful that the teen is responsible, because a joint account gives them equal control of the card.

“They could easily go on a spending spree and raise that limit,” Menendez said.

Spavale admits it does get tempting.

“You can get in a lot of trouble with it," she said. "There have been several times when I have taken it away from myself, and gone ahead and freeze it in the refrigerator, so I can’t use it."

Samantha Spavale (left) has has built a good credit history and proved she is responsible, even with the temptations of plastic money. (Angie Moreschi, staff)

Authorized Users

Menendez says in most cases, it’s better to start by making your child an authorized user on a card where you’re the primary holder.

An authorized user gets all the benefits of using the card and starts to establish credit, but it gives the primary holder more control. If an authorized user overspends, you can remove them from an account.

You still have to keep a close eye on the account, though, because the authorized user doesn't have legal responsibility for the debt. So be aware, as a parent — it could affect YOUR credit score.

The goal is to teach your child discipline. To help avoid spending sprees, explain to them that the card is for "needs," not "wants."

“My recommendation for kids is let them use it once a month to fill the tank with gas, and then get that credit card back,” Menendez said.

Also, be sure to have the teen sit down and pay the bill every month, to get in the habit.

The process worked well for Spavale.

“I have been very responsible,” she said. “I keep a close tab on it for gas, food and a few major purchases, like textbooks.”

Secured Cards and Retail Cards

Another option is a secured card, which requires a security deposit against the credit limit.

“Basically, you put down money that’s used as a security-- usually in the neighborhood of 300 to 500 dollars,” Menendez said, “It works just like a regular credit card and shows up on your credit report. If you default, that money will be taken.”

Generally, after about a year of on-time payments, you can convert the secured card to a regular card and get the security deposit back.

Retail credit cards also help to build credit and are easy to get. But young people have to be extra careful to control the temptation to over-spend at a favorite store. In addition, don't make the mistake of opening too many retail accounts.

“It’s not necessary to have 10 credit cards,” Menendez said. “That’s one problem we see with young people. They start opening cards left and right, and pretty soon, they have a wallet full of cards. For what? We recommend three major credit cards. That’s it.”

College Graduates get Preference

Another thing to keep in mind: college graduates have an easier time getting credit, even if they haven’t established a credit history, because creditors consider them to be a better risk.

“If a student has graduated with honors and all that, that student is more likely to get credit offers,” Menendez said.

After three years with a credit card, Spavale has built a good credit history and proved she is responsible, even with the temptations of plastic money.

“I’ve been pretty good about it,” Spavale said. “It’s built my credit to a point where I’m almost at a 700 (credit score).”

A credit score of about 640 is generally needed to be considered for a home loan, so 700 is very good, especially for such a young person.

Having a credit card can teach a young person good money management skills to lay a foundation for the future.

Spavale now pays her card off, on her own, every month. As for the most important thing about having a credit card, she says pay it off on time.

Smart kid.