Can a teen build up his credit to get a car loan later?

Answered by Car Loans Expert Jim on March 3, 2021

My 16-year-old son wants to get a loan to buy a car once he turns 18. Can he start building his credit now to qualify for the loan, and if so, how?

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Car Loans Expert

There are a few ways in which your son can start building his credit history:

  • Get a secured credit card. A secured credit card is linked to a checking or savings account controlled by a parent. Both the parent and the child can make deposits and the limit is equal to the total amount deposited into the account. This is a conservative way for a minor to begin building credit.

  • Open a wireless phone account. Some wireless carriers will open accounts for customers as young as 16. It’s important to read the user agreement carefully to make sure there are no long-term commitments that may be undesirable. But provided that the payments are made on time, this information is reported to the credit bureaus and helps improve the minor’s credit score. Late payments, of course, have the opposite effect, so it’s important to have a plan that your son can keep up with.

  • Be made an authorized user on the parent’s account. Whether it’s your credit card or checking account, making your son an authorized user puts his name on the account and he will start to build his credit history.

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