Building the Credit of Your Child - What You Need to Know

Parents have a lot of responsibility, especially during the formative years of their children. It's understandable that you probably feel rather overwhelmed sometimes. After they learn to take their first steps and say their first word, time flies. Eventually, it's time for them to learn fundamentals like reading, writing, and arithmetic. Before you know it, it's time for them to learn about financial responsibility.

It's never too early to start teaching kids about money, which usually begins with savings and a piggy bank. At some point, you can begin to teach them about credit. This involves management and proper use. 

How can a child start to build credit?

There are certain ways children can start to build credit. Credit for kids is typically tied in to that of their parents.

Credit Builder Loans

This financial product is low-risk, and qualifying is easy, even for people who don't have a prior credit history. It also doesn't require parents to co-sign on it. If your child applies and their application is approved, the lender holds the amount in a savings account that's interest-bearing. Typically, the loan is applied for through an online lender, local credit union, or community bank. As soon as the final payment is made, after a year or two, the loan will be released from savings along with the earned interest.

Authorized User Status

One of the most convenient ways to start a child's credit-building is to have them as an authorized user on your existing credit card. It doesn't take very much to add your children on to a card. Typically, a call to your card issuer should do it. Of course, there is a process involved, including providing personal information such as his or her full name, date of birth, and probably even their Social Security number.

It's a rather safe route to take, as your daughter or son being on there will not endanger your credit rating as you help build theirs. Take note of the following advantages and disadvantages, however, before you make a final decision:


  • Certain card issuers allow for a monthly spending cap to be set by primary account holders for authorized users.
  • Most card issuers report credit history to Experian, TransUnion, and Equifax for both the primary account holder as well as the authorized users.
  • If your payment history is good, the credit of your son or daughter can benefit from this track record.


  • Any negative information about your credit card, such as high utilization or late payments, may make the account a liability to your child's credit.
  • Depending on your card issuer, there may be an additional annual fee when authorized users are added to the account.


As adults, one of the most important things we need to take care of is our credit score. Part of that is being financially responsible, which is why teaching your kids about credit is a great idea. Give them the best chance at an excellent credit score as adults by teaching them about things like credit building, management, and proper use at an early age.

Looking for help with building credit for your child? Download Kiddie Kredit, the mobile app designed to educate children on the credit system by completing chores!

John D Saunders

John D. Saunders is a Web Designer and Founder at 5Four Digital, CMO at Kiddie Kredit and an Automation Expert with a decade of experience building brands online. He's worked with clients including Audi, NAACP and Apps Without Code.