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Teen Resources

Credit: Get Some!

A common problem among teenagers when checking their FICO score is not finding any information. It’s important to start building credit in your name at an early age, but to here are a few things you can do to help get you to that point:

  1. If your parent or guardian has a good credit score, ask to be added as an authorized user on their credit card. This will allow you to inherit their good credit history and start building your own.
  2. If you don’t qualify for a credit card on your own and don’t have the opportunity to be added as an authorized user, consider taking out a secured credit card. This card will operate the same as a regular credit card, but the difference is that you will not be able to spend more than you have on deposit with the card issuer. You are securing your spending with your own deposit, so there is less risk to the lender and you get the benefit of establishing a good reputation as the card holder.

Once you have established your own credit history and FICO score, it's important to choose the right credit cards and loans. Make sure you are paying attention to your rates, fees and terms. All too often, we meet people who have signed up for credit cards to get free gifts – not realizing that card comes with a sky high 20% Annual Percentage Rate (APR) for cash advances or purchases. A lot of cardholders also pay annual fees for a Rewards credit card. If you are on a budget and use income from an allowance or part-time job, you should not be paying extra fees for a rewards card where you probably won’t be able to pay for the rewards. Also, be wary of introductory rates. Often times, you may start out with a 0% APR that will jump above 20% after the first six months or if you are late on a payment. The cost of doing business with these credit cards is too high. If you find yourself in one of these situations, consider a balance transfer to a credit card with a lower APR and no fees.

Other things to be aware of where shopping around for the best cards and rates:

  1. Know your grace period – the closing date of your monthly statement and the day your payment is due
  2. Know your billing cycle – there are two methods of computing your bill – average daily balance (preferred because you will only pay interest on the unpaid balance) or two-cycle average daily balance (not recommended because you pay interest on the entire original amount owed – regardless of any portion you already paid off in a prior month)
  3. Read the fine print. Yes, all of it! Make sure you know the exact terms that you are signing up for.
  4. Review all contracts for inaccuracies prior to signing on the dotted line.