• Ideal for: Everyone building credit including 18 year olds
  • Ease of Implementation: Moderate: Primary card holder will need to call the card holder to make this happen 
  • Timeframe for results: Varies but usually 30-60 days to see results 
  • Cost: Usually none, sometimes a nominal fee for a physical card
  • Risk: Some risk for both parties
  • Effectiveness: Very effective
  • Sustainability: For as long as the primary card holder agrees so it can be long-term
  • Finimpact score: 5

An authorized user is someone who has been added to the account by the primary card holder. The authorized cardholder doesn’t need to meet any credit requirements to be added and they will gain all of the benefits of this trade line. They may need to have a U.S. social security number and meet an age guideline though. 

For example, if you’re an authorized user on your dad’s Visa card with a $20,000 limit and he pays it off in full every month, you will see those benefits show up on your credit report. The primary cardholder can decide if you receive a physical credit card or not. 

2. Open a Secured Credit Card

  • Ideal for: Anyone trying to build or repair credit
  • Ease of Implementation: Relatively easy
  • Timeframe for results: 30+ days
  • Cost: The cost of the security deposit plus any initial and annual fees
  • Risk: You do have to put your own money up but there isn’t much additional risk involved
  • Effectiveness: Very 
  • Sustainability: Long-term
  • Finimpact score: 5

A secured credit card, also sometimes called a prepaid credit card is a great tool for 18 year olds who want to build credit and want the convenience of having a credit card but may not qualify for a non secured one. 

secured credit card is a credit card that requires a deposit. Your deposit minus any fees is how much your credit limit is. For example, if your deposit is $500 and the fees are $100, your credit limit is $400. 

3. Take Out a Student Loan

  • Ideal for: Students who want to build credit 
  • Ease of Implementation: Can be difficult because you need to fill out applications and meet qualifications 
  • Timeframe for results
  • Cost: Can be expensive to pay back with interest and higher education in general is expensive
  • Risk: Depends on if you stay in school and graduate and if you find a good job where you can afford to pay back the loan
  • Effectiveness: Moderate
  • Sustainability: Long-term but the actual length depends on the loan term 
  • Finimpact score: 2

student loan can help you build your credit if you’re enrolled as a full-time student and qualify for the loan based on your academics, income, and credit etc. You may need a co-signer or your parents may need to take out the loan depending on what type of loan you apply for. However, there are some loans that students can take out on their own. 

Payments aren’t typically due until six months past graduation. A student loan can help you add a line of credit to your credit report and is especially useful if you also need it to pay for the school you want to attend. 

4. Get a Car Loan

  • Ideal for: Building credit
  • Ease of Implementation: Varies but not super easy
  • Timeframe for results: 30+ days 
  • Cost: Can be expensive with dealer fees, loan fees, and interest 
  • Risk: Risky if you miss a payment because you may default and lose your car and negatively affect your credit 
  • Effectiveness: Very
  • Sustainability: Long-term typically 3-7 years 
  • Finimpact score: 4

Having your own vehicle to get around is imperative in most places in the U.S. Getting an auto loan can help you afford a car and it can also assist in building your credit. You may need a downpayment to apply and your initial interest rate will be higher than borrowers with excellent credit scores, but many auto loans are available to those starting their credit journeys but a co-signer may be required. 

Car loans can help you establish credit and if you make your payments on time and then pay off the loan, you will see your credit score increase. This will also show lenders that you’re a trustworthy borrower with a positive credit history. 

5. Obtain a Credit-Builder Loan

  • Ideal for: Anyone building credit including young borrowers
  • Ease of Implementation: Fairly easy
  • Timeframe for results: Length of loan term plus time to report to agencies
  • Cost: Varies but there are lender fees and interest
  • Risk: If you default there’s a risk
  • Effectiveness: Very
  • Sustainability: Depends on the loan term 
  • Finimpact score: 4

credit builder loan is a loan specifically designed for borrowers with no or limited credit. They’re typically offered by small institutions such as credit unions, banks, or online lenders. Expect to borrow anywhere from $300 to $1,000 minus any fees. Typically, once you’re approved for the loan, the amount is set up in a savings account for you and you can’t touch the money until you start making payments, which is different from how a traditional loan works. 

Each payment you make will be reported to the credit bureaus so it’s important to pay on time and not miss any payments. As you pay down the loan, the lender may let you access the funds, or they may wait until the loan is paid off. 

These loans help 18 year olds build credit history, establish a positive payment history, and then show that a loan has been paid off. All of these things will positively impact your credit score. 

6. Arrange for Rental Payments to Be Reported

  • Ideal for: Anyone renting 
  • Ease of Implementation: Depends on your landlord
  • Timeframe for results: 60-90+ days
  • Cost: Usually free unless you use a service that adds your rent to your credit report
  • Risk: None unless you miss rent payments
  • Effectiveness: Very
  • Sustainability: As long as you are renting at that same place
  • Finimpact score: 4

Unfortunately, rental payments aren't typically automatically reported to the three major credit bureaus. You can ask your landlord if they can report it for you. Alot of large leasing management companies can easily do it because they have the software in place already. 

However, a small landlord may not know how to do it or be willing to make the effort. There are some agencies and apps that may be able to help you report rent and utilities etc. Search for them online but make sure to check out their ratings, reviews, and fees before signing up. 

7. Receive Credit for Paying Utility and Phone Bills

  • Ideal for: Everyone who has utility and phone bills 
  • Ease of Implementation: Not that easy 
  • Timeframe for results: 30+ days
  • Cost: Usually none but an outside agency may charge 
  • Risk: None unless you don’t pay your bills on time 
  • Effectiveness: Can be effective if reported
  • Sustainability: long-term 
  • Finimpact score: 3

Utility and phone bills aren’t always reported to the credit bureaus. Cell phone bills are usually reported so making on time payments will help build your credit score. It’s also easier to qualify for a cell phone than it is to qualify for other things like credit cards. Keep in mind that you may need to put a down payment on the phone if you’re buying a phone and getting new cell service. 

If you want to get credit for all of your utility bills, first call the companies like your gas or water company and see if they will report it to the credit bureaus. If not, find an outside agency that will help you get it reported. 

8. Don’t Close Out Your First Credit Card 

  • Ideal for: Everyone 
  • Ease of Implementation: Very easy
  • Timeframe for results: 30+ days 
  • Cost: None unless there are annual credit card fees
  • Risk: Very low
  • Effectiveness: Effective
  • Sustainability: Sustainable for a long time 
  • Finimpact score: 5 

It may be tempting to close out your first credit score. It has a low credit limit and you don’t use it anymore. Well, think again! Leave it open. It helps you with two things: Establishing a longer credit history and showing positive payment history. If you use less than 30% of your available credit, it can also help improve your credit utilization rate which helps build your credit and raise your credit score. So, keep your card open and buy a soda or gas or whatever on it every so often. 


Tips for Responsible Credit Use at Age 18

Here are some tips on using credit responsibly at a young age:

  • Make sure you understand the basics of credit: This is something that often isn’t taught at home or in schools but is so important for pouring the foundation for your financial future. Know what goes into making up your credit score, how it’s negatively and positively affected, and know how credit cards work and when you need to pay them back. The more you know, the better. Check out free credit and money management resources as early as possible. 
  • Have a steady source of income: Whether you’re in college and get a monthly allowance, have a part time job, a freelance gig, own your own business, or work full time, you need to maintain sources of steady income. Get creative and put your talents to work but make sure you make money. You will need it during your credit building journey. 
  • Make a budget and follow it: This is definitely hard in today’s often consumer driven and materialistic society but keep your goals in sight! By following a budget now, you’re more likely to be financially free later on. Save now so you can splurge later! And remember, that new designer item is not nearly as impressive as that high credit score. Additionally, that high credit score will put you in a position a designer item never could. 
  • Pay all your bills on time: Payment history is a huge factor that influences your credit score. Pay your bills on time every month! Life happens and sometimes we forget but set up auto-pay or put each due date in your calendar to ensure no payments are missed. You don’t want to risk having your credit score drop just because of one missed payment. 
  • Make more than the minimum payment: No one likes to waste money and that’s exactly what you’re doing when you only make your minimum payment. You’re throwing money away on interest charges. Pay your debts off in full each month if possible and if not, pay as much as you can to avoid interest charges. 
  • Keep credit utilization low: Just because you have $2,500 available credit does not mean you should use it all! Aim to keep your credit utilization ratio below 30% That means that ideally you shouldn’t use more than $750 per month of your $2,500 limit. This will help you prevent overspending but also help increase your credit score because credit utilization is one of the major factors that influence your actual credit score. 
  • Monitor your credit score and dispute errors: Use a credit monitoring service for a fee or keep an eye on your credit yourself if you’re going to be diligent about it. It’s always easier to put out fires, prevent fraud and identity theft, and dispute errors as soon as they happen rather than months down the line having to go back and fight to get them undone. 
  • Sign up for ExtraCreditThis site gives you one free credit score and a bunch of free helpful credit tips and insight including things like how different loans work and credit card guides to find the one that suits your needs. The site also has credit card payoff calculators. 
  • Take advantage of student credit cards: These are designed for students, may require you to be a full or part time student, and usually don’t have strict credit requirements because they know you’re building your credit. They may also offer rewards for on time payments and cash back benefits. This is a great tool to build your credit and then ‘graduate’ into a regular credit card. 
  • Consider a co-signer: A co-signer may be able to help you get that credit card, loan, or apartment that you want. They will need to be able to trust that you’re going to pay back whatever the debt is because they will be on the hook for it as well as you. You may need a co-signer at first and then once you make monthly payments and time goes by, you may be able to qualify without the co-signer. 


Top Factors That Affect Your Credit Score

It's important to know the basics of credit at 18, including what a credit score is, what factors affect your score, and how credit is used by lenders and other organizations. 

The main factors that affect your credit score include:

  • Payment history: This is one of the most important factors affecting your credit score. In fact, it can account for as much as 35% of your credit score. Lenders want to see that you pay your bills and that you pay them on time. One missed or late payment can have a huge negative impact on your credit score so be mindful of paying on time every month even if all you can afford that one month is the minimum payment; it’s far better than not making a payment. 
  • Amounts owed: This is calculated by dividing the total amount of credit you’re using by your total credit limit and is known as your credit utilization ratio. You should aim to use less than 30% of your credit limit. For example, if your limit is $1,000, aim to use $300 or less each month. The amounts owed make up 30% of your credit score so are another important factor. 
  • Credit history length: If you’re young or just starting out on your credit building journey, you won’t have a long credit history. The length of your accounts makes up 15% of your score. Your newest account, oldest account, and average account length are all taken into consideration. Usually, the longer your credit history, the higher your credit score. 
  • Credit mix: Having a mix of credit accounts means that you have diversification such as credit cards, a personal loan, a mortgage loan, and an auto loan. Borrowers with excellent credit scores usually have a mix of creditors. The type and number of the accounts makes up about 10% of your credit score. You can work on building this up once you initially establish your credit history. For example, you can get a cell phone, a small personal loan, and a secured or prepaid credit card to start with. Then work your way up to home and auto loans. 
  • New credit: The number of hard inquiries on your credit report and the number of new accounts opened factor into your credit score. In fact, they make up 10% of your Fico score. Don’t apply for every credit card mailer or email you get. You don’t want too many new accounts or too many inquiries hitting your credit score. Think moderation here!


The Benefits of Building Credit at 18

Your credit score can determine if you will be approved for a loan and some employers often check your credit score before hiring you. At 18 it also matters because some student loans are credit based, so if you build your credit score, you may be able to get a loan to go to the college or university you always dreamed of attending. 

Some benefits of building credit at 18 include:

  • Lower interest rates: Good credit can lead to lower interest rates on loans, 
  • Better rental opportunities: You may be approved for that beautiful apartment with the swimming pool and tennis courts. 
  • Financial freedom: Having a good credit score, typically a Fico score between 670 and 739, can open the doors to so many possibilities. 
  • Saving money: Building credit early can save you thousands of dollars on lender fees and high interest rate loans. 
  • Open a business: Building credit early can be the difference between getting approved for a business loan to open up your dream bakery or sneaker store. 
  • Buy real estate: Build your credit so you get approved for that cute condo you always wanted to purchase. 
  • Higher loan limits: Qualify for loans with higher limits because you’re considered a qualified and low risk borrower that lenders want to work with because they feel like you’re going to repay the loan based on your positive past credit history. 

If you start out with positive credit habits and knowledge, you’re less likely to make poor financial decisions later on. It’s much easier to start building your credit at 18 than it is at 38 when you have negative marks on your credit history and a plethora of financial and familial responsibilities to juggle. 


Final Word

Now you know that your credit score is made up of different important factors including payment history and a mix of credit accounts. You understand how your credit score works, how important it is to monitor your credit report, and how to build credit at 18. 

You’ve found out the benefits of building credit at a young age including setting yourself up for a successful financial future, getting the job you want, and being able to easily buy a house and a car. Now, it’s time to implement these strategies as you set out in the world. Remember, that it’s easier to build credit slowly and the right way in the beginning then to have to fix it later on. 

Frequently Asked Questions(FAQ)

Can you build credit before age 18?

You can start building credit before age 18 if you’re an authorized user on an adult’s credit card. Some companies allow younger consumers to be authorized users and some require them to be a certain age; check with your cardholder for their policies. 

It’s also never too early to learn about how credit works, to open checking and savings accounts, and to start practicing positive saving and budgeting habits. 

How long does it take for a beginner to build credit?

There’s no set amount of time that it takes a beginner to build credit. There are so many factors involved. How much time do you have to devote to building credit? Do you have any credit history? Will your parents be co-signers or let you be an authorized user on their accounts? Your current occupation and salary can also affect how long it takes you to build credit. 

Additionally, your spending habits, ability to budget, and being able to say no to purchases you can’t afford will all affect your credit building timeline. Sure, some people may be able to get their credit score to 800 in 45 days, but it may take a beginner a bit longer and that’s ok. The important thing is that you get there. 

Why should I start building credit early?

There are so many reasons why you should start building credit early which include:

  • Easier to build than repair: That new designer bag or that limited edition pair of sneakers may tempt you but remember they are not worth going into debt for! It is so much easier to build your credit from scratch than it is to have to repair it down the road after you’ve bought things you can’t afford. 
  • Start on the right foot: You’re starting life out as an adult and you get to choose how you go into the world. Having a good credit score and building your credit history shows that you’re trustworthy and responsible and will make the right decisions. 
  • Work towards your financial goals: Build your credit early so you can finance your dream home, start that business you always wanted to open, help out your family members, or pay for that private university with the top rated business program. 
  • Become financially free: Whether you grew up struggling financially or grew up with no financial worries, you want to become financially free and independent. The single best way of doing this is by building your credit as early as possible. Your credit score is uniquely yours and it can open up a world of possibilities. 
  • Be in the power position: With a good, great, or excellent credit rating, you are in the position of power. You will get access to the best loan products, the best rates, terms, and the highest loan amounts. 
How can I get a credit card at age 18?

 There are a number of ways to get a credit card at 18 that include the following:

  •  Ask for a co-signer: Find a credit card that allows co-signers and see if you can get a co-signer until you can qualify for a credit card on your own. Keep in mind that the co-signer is responsible for the bill if you miss payments or pay late. 
  • Apply for a student credit card: These credit cards are designed for students with little to no credit history. They will have low credit limits to start with but are great for building credit. 
  • Apply for a secured credit card: This credit card is targeted towards those with no credit or those who are trying to build or repair their credit. You put down a deposit and that is your credit limit minus any fees the cardholder charges. After a number of on time payments, they may allow this card to then switch to a regular credit card and you will get your deposit back. 
  • Be an authorized user: Ask your parents or a responsible adult that you have a trusting relationship with and that also has good credit and pays their bills on time. They may agree to let you be an authorized user on one of their credit cards and allow you to also have your own credit card. It will be in your name but will be associated with their account so only spend what you agree on. 

About the Author

Allison Bethell

Written by: Allison Bethell

Real Estate Expert

Allison Bethell is a content writer, real estate investor, small business owner, and consultant. She has a B.A. from Villanova University in Sociology and Business. She also holds several graduate certificates in early childhood development, screenwriting, and contract law.

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