Credit = Trustworthiness
What Affects Credit Score
For teens who are just getting started with credit, it’s a good idea to go over how credit score is calculated. Payment history, length of credit history, new credit, and amount owed are all factors. If you need a refresher before talking to your teen, brush up by reading the Top Factors That Impact Your Credit Score.
Create a Plan
Create some guidelines to help your teen navigate their credit card usage. Will it be an emergency only card? What qualifies as an emergency? Who will pay the bill at the end of each period? Who will keep track of that due date? Make sure that your teen understands how interest works and how it impacts the amount owed over time.
Start with Prepaid
If your teen currently has no experience with using plastic, it’s a good idea to begin with a prepaid debit card. These cards are preloaded with a certain amount. Your teen will only be able to spend up to the amount on the card. If they continue to hit their limit every month, it's time for a budgeting talk.
Open a Secured Card
Once you feel confident in their understanding of responsible credit, think about adding them to your USALLIANCE Secured Visa Card. Keep in mind that your actions will now impact their credit and their actions will impact yours. Watch their use of the card to ensure that they’re not spending above their means. If they are unable to pay off their part of the bill each month, sit down and review the account on a regular basis. Discuss where they’re overspending and where they can cut back.