How to build credit at 18?

By Gerald Dunigan

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The younger you are, the easier it is to earn trust in your finances over a period of time. This is why it makes sense to start building credit at 18 if you can. When you are building credit at 18, you are lucky enough to have more time available before you will need to utilize your credit to apply for needed loans or housing. If you have not established credit yet, it can become quite difficult to get approved for bigger loans, better credit cards, or nicer apartments. Be prepared, and you will not have to face this issue later on.

How to build credit at 18

By establishing credit at 18, you have already put yourself many steps ahead of others your age. Most people start thinking about their credit later in life. At this point, it is sometimes too late. They will still be working on building it up to a high number even when they need to apply for mortgages or credit cards. In order to enjoy the nice things in life, earlier in your life, it is crucial to make an active effort towards fixing your credit score. In this article, we will go over exactly how to start building credit at 18.

Become an authorized user

Becoming an authorized user is arguably one of the best ways to establish credit. This method can help you to build a credit score, even if you are younger than 18. It can give your credit a significant boost when you are at the starting block.

If you are an authorized user, someone else has basically given you the right to use their credit card like it is your own. The name on the card would be yours, but it would be under a primary account holder. The latter would contact the credit card company and agree to add your name to the authorized user list. An authorized user is not legally responsible to pay the bill. They also cannot make any significant changes to the account. Because of this, make sure you are under a trusted account holder because their actions could hurt you if they are not on top of making payments.

Have a joint account

Having a joint account is another good way to build credit at 18. If you do not have the luxury of having enough money to build a good payment history, a joint bank account could positively impact your score. This, of course, is only true if the person you are sharing the account with is actively making payments on time.

If you have a joint account, it is usually with a parent or trusted guardian. It is really important to trust the people that can affect you financially. This way you will always be secure of your own accounts and will not need to fret that payments are not made on time.

Get your first credit card

Getting a credit card for the first time is one of the best ways to build credit at 18. This is typically people’s first go-to method because it is a guaranteed way for starting a credit score at 18. Most credit card companies will not approve applications of those that do not already have an established credit score. However, there are special types of cards called secured credit cards that will approve these applications.

These cards are designed to help people build their credit, especially young people. Do not shy away from applying just because you do not have a score! When you get a secured credit card, you will need to put a deposit down. Typically these deposits are between $200 and $500. This deposit becomes your hypothetical credit limit. You will only be able to use that amount before needing to pay it back at the end of the month. If you attempt to spend over the deposit amount, your credit card will get declined. Make sure this does not happen! Having a deposit allows credit card companies to gain trust in you because they have collateral.

Make payments on time

starting a credit score at 18

Once you get your first credit card, it is time to start a positive credit history. This comes with making payments on time. This is so essential for your credit history! To make sure you never forget to make a payment, consider setting up autopay.

This process allows your back accounts to make automatic payments without you ever having to lift a finger. This can be set up with your checking account or your savings account. Most credit cards will allow you to make minimum payments of your statement. Do not do this! This is a simple way for you to fall into credit card debt. Always pay off your full balance so that this never happens.

Keep your credit utilization low

Once you get approved for a credit card, you will also get a credit limit. This is the amount of money the company will loan you before you are obligated to pay it back. You are not able to go over this limit or else your card will get declined.

For some reason, credit bureaus like to see a low credit utilization ratio. This means that they prefer that you use a smaller portion of your credit limit to prove that you are not struggling with your finances. The golden rule is to always stay under 30% of your credit limit. As long as you are under this amount, your score will begin improving in no time. If you choose to go over 30%, your score may stay stagnant or slightly decrease. It is better not to take the risk.

Make payments frequently

If you are making payments on time but are struggling to keep your utilization ratio low, this is a good tip for you. Making frequent payments has two benefits. The first is that you will always pay your credit card bill on time since you are paying multiple times per month instead of just one. You will never miss another payment!

The second benefit is that your credit limit will replenish itself every time you make payment. This means that you can spend more per month without going over the 30% utilization ratio recommendation. The smaller your ratio, the higher your score will rise. Some people like to make payments every single week to stay on track.

This is a secret tip that only insiders know, and we want you to stay in the loop. Most adults are paying utility bills monthly. These bills could be the gas bill, electric bill, water bill, sewage bill, etc. If you are paying these bills consistently, they have the potential to be helping your score! This is because they are all attached through your social security number.

These accounts are not automatically linked, so all you need to do is get them linked to your credit report. As soon as you take this action, your credit score will soar higher. Do not miss out on this easy step that you have been taking all along. This also means that you will need to be paying these bills on time as well. If you are making late payments, do not link them to your credit.

Get a secured loan

Without a history of credit, loans are hard to come by. However, there is a special type of loan for 18-year-olds with no credit history. They are called secured loans. If you are desperately in need of a loan, try this method out.

You will face high-interest rates though because of your lack of existing credit score. A secured loan is different from a regular loan because it is backed by financial collateral. The collateral could be a physical asset such as a house or car. It could also be money that is in a bank account such as a CD or a savings account.

We recommend that you only use this method if you are in need of a loan. Do not use it simply to build credit. Due to the high-interest rates, you will end up paying back a lot more money than you initially borrowed.

Use a credit builder loan

A credit builder loan is also another type of special loan for those who are working towards a credit goal. It is essentially an artificial loan where they never actually give you the borrowed money upfront. The loan is only given to you after you have completed all of your payments.

This way the lender does not have to trust you because they have your initial payments to hold over your head. Interest rates still exist in these situations, but they are not as high as a conventional loan. Loans like these are solely for the purpose of building your credit, and they are a good option if you are willing to pay the principal plus the low-interest rates.

Apply for multiple sources of credit

Credit bureaus prefer to see multiple sources of credit in order to build a higher credit score. This is because it proves to them that you are able to manage multiple credit lines at the same time. This is basically just an aspect of financial responsibility.

Each credit line that you apply for will create an inquiry on your report. This drops your score temporarily, and the decrease could last from a couple of months to 3 years. Space out your applications by a couple of months so that you do not receive too many hard pings in a small time frame. Make sure that you are not applying for any new lines of credit before you are attempting to apply for a big loan such as a mortgage.

Do not close out any credit accounts

Once you open a credit line, do your best not to close it. Having a higher average age of all of your accounts will positively benefit your score. If you have a credit card that you no longer use, avoid canceling it. Instead, keep it at home or stored away so that this credit line can get older. Every time you open a new account, the average age will drop, so it is important to keep your older accounts to balance everything out.

Check your credit report often

Once you establish a credit report, it is important that you remember to check it often. Credit reports will frequently contain errors. It is up to you to make sure that they do not live on your account for long. If you notice any inaccurate information or a hard inquiry that you did not consent to, make sure you dispute the remark. Remarks can be disputed by writing a letter to the major credit bureaus asking for proof or verification of the incident. You may also find out more information on how to dispute a report. If you are checking your report often, you should not have any major problems. Remarks are harder to remove the longer you wait.


We hope this article has answered some questions about how to build credit at 18. Put your efforts now, and start building credit at a young age. You will definitely thank yourself later when you realize that you do not need to actively be working towards a credit goal in your future.

People often have limited experience with credit when they are younger and do not always realize the benefits that it comes with. It will become much easier to be financially independent, and you will suffer less from the extremely high-interest rates due to trust from loan providers. Hopefully, these tips for building credit proved helpful, and you can begin your credit-building journey today.