When Should You Get Your First Credit Card? – Episode #22

When should you start to get your first credit card? What age should you get your first credit card?
First, I’m going to lead with a caveat. Credit education should start in grade school. While many think this should be a course in high school, I think money habits are learned much earlier and high school is much too late. Next, I have to ask the age old question, do you make more than you spend? Obviously, if you are a student, you are just starting to build credit and your expenses exceed your income. Still, you want to set a budget outside of your tuition and make sure you can cover these expenses. By the way, lenders may still lend to you, as they see the potential for future income.

Here’s the plan to build credit. First, start with getting a bank account and start with a debit card. You can practice the use of credit cards by using debit cards first. Notice that you really have to know your account balance before you use a debit cards. Next, you want to move up to food chain and get a secured credit card. Once you establish a good few months of history, you can apply for an unsecured credit card.

Another route is getting an authorized user credit card. While, many think this is no longer a way to build your FICO credit score due to the FICO ‘08 model, the model still includes score impacts for authorized users.

There are advantages to starting early. One of the credit characteristics of someone with a great score is that they have an account over 18 years old. This is an argument for starting to build credit when you are 18. That said, you have to be ready.