Can a teen build up his credit to get a car loan later?
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?
Answer provided by
Answered on Mar 12, 2021
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.
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Browse by topics
What others are asking
What happens if I get into a not-at-fault accident with my Audi and I don't have gap insurance?
I have a financed 2016 Audi A3 and I still owe $22,000 on my loan. My insurance marked it a total loss and I don't have gap insurance. If I do get a check from the other driver's insurance company, does that get turned over to my insurance? How can I pay my loan?
May 03, 2021
"How can I get rental car liability insurance for an eight-week road trip? "
I don’t own a car and don’t have any car insurance. I will use my credit card for collision coverage, but what about liability coverage? Is it cheaper to use the rental agency’s liability coverage or a third-party insurance company?
May 06, 2021
Can I make a claim with my own insurance if the other driver is underinsured?
I wasn't at fault in an accident and the other driver only has $25,000 in liability coverage. My medical bills and the damage to my vehicle have exceeded this limit. I do have uninsured/underinsured motorist coverage. Am I able to submit a claim to my own insurance?
May 10, 2021