As a teenager, one of the things that you look forward to is growing up and being on your own, this comes with its own set of challenges and responsibilities. Being financially independent is one of them and it isn’t an easy path. Having a good credit score is quintessential to financial independence. Since you are a teen and still ineligible for a credit card, how do you go about building a good credit score?

Get added as an Authorised User –

Ask your parents to include you as an authorised user on their credit card. This will allow you to build a good credit rating based on your parent’s credit rating. Remember, you have an added responsibility to ensure you don’t wreck your parent’s credit rating as they are still the primary account holder and responsible for payments. Another point to be noted is that your parents will be able to monitor your spending and can correct or check you when you appear to be spending unnecessarily.

Get a Secured Credit Card –

What is a secured credit card? Secured credit card is issued after an initial security deposit, collateral. You can go about using it as a regular credit card and make monthly payments. This will help you get familiar with the use of a credit card and when the time comes, you can move to a non secured credit card.

Get a Student Credit Card –

If you are above 18 years, then you are eligible for a student credit card which does not have an income eligibility limit. These credit cards have a low interest rate and are valid for a period of 5 years. This is a relatively new concept in India, but you can move to this from a secured credit card and you will be solely responsible for making payments and maintaining the card.

Cultivate Good Credit Card Habits –

When you start using a credit card, it needs to be done judiciously to maintain a good credit rating. You can do that by paying the bills promptly on the full balance and maintaining a low balance. Be aware of the charges the bank will levy on you for a late payment, partial payment or minimum payment. The interest rate charged by the bank for partial or minimum payment is very high, you would be wise to make full payment on time and this will also help increase your credit rating. Don’t share your credit card details and pin freely and monitor your statement and credit reports for any misuse or fraud.

Use the card occasionally –

When you get a credit card, it initiates your credit history and shows that you have a credit card with all the details – purchases and payments. Not using the card will not lead to a good rating but can lead to deactivation of the card. So to maintain a good credit report, you have to use the card, use it to make a few small purchases that you are sure of repaying on time, like grocery, OTT subscription, phone bill, etc. which will only boost your credit rating.

Avoid high cost purchases –

A credit card can be a very valuable tool if used responsibly. Don’t foolishly charge your card just because you have it and spend your or your parent’s money on repaying it. Use it like you would when you had no credit card, buy only that is necessary. Making unnecessary purchases will only block your credit limit and in time of an emergency, you will be short of funds.

With these tips, you can start your credit journey well informed and make wise choices in choosing a good credit card with low yearly maintenance charges and interest rates. Pay your bills, not just credit card, utility bills, rent or maintenance on time as that too affects your credit rating. Spend judiciously and maintain discipline in your payments, this will help you maintain a good credit rating.