5 ways to help teens establish credit

Get your teen off to a good start with their own savings, secured credit card and more.

Even before they're old enough to get a credit card or apply for a loan, teenagers can get a head start on developing a strong credit history. 

Here's how to help your teen get started.

1.Encourage your teenager to get a job. Your teen will be more invested in managing his or her money if it's hard-earned. And holding down a job reflects favorably on your teen's responsibility.

2.Open checking and savings accounts. Responsibly managing and maintaining these basic accounts will show a financial institution that your teen can handle money. If the account comes with a debit card, your teen will get a feel for using a card for transactions.

3.Consider putting one of your household bills in your teen's name and have him or her pay the bill. Even if you're helping to supplement the payment, having the bill in your teen's name establishes a payment record. You also can add your teen as an authorized user on your credit card. Your teen receives a card in his or her name, and any purchases go on your account, which allows you to closely monitor spending habits. And, purchases and payments made under your teen's name will be recognized on his or her credit report.

4.Obtain a secured credit card. These cards can be put in your teen's name. Make the initial deposit together, which is the credit limit for the account. Then he or she uses the card to demonstrate expenses can be handled and payments made on time.

Monitor your teen's activities as he or she gets into the credit habit, allowing more flexibility as responsibility is demonstrated. Once several months of purchases and payments are under your teen's belt, access his or her credit report and review it together to make sure everything is correct.

5. Have your college-going child apply for a student credit card. Once your children reach their late teens, if they've established good financial habits, they may be ready to apply for their first credit card. College students may be able to qualify for student credit cards, which usually have lower credit limits and higher interest rates than general credit cards carry.

Still, by law, applicants under age 21 will have to show that they have enough income to support a credit line. A part-time job is usually good enough proof. The other way for them to qualify is for you or someone else to co-sign for them. But you get less control as a co-signer than when you add your child as an authorized user. For instance, you may not receive notice of late payments, which can harm your credit score. For that reason, it's better for your children to get their first solo card on their own.