This week a teacher in North Dakota reached out to me regarding a question that was raised in her classroom about how someone builds a credit rating if they don’t apply/use a credit card. A great question that not only teens have, but also many adults. Here’s my response:
Establishing credit does not take a long time- so there is no real emergency to do so.
More important is to get it right – to use it wisely and understand it’s purpose and role in your life. My suggested approach would be for students (teens) to get a checking account and tie a debit card to the account. Manage that wisely for a period of time – don’t spend more than you have. (That will not establish credit – but it will give you some practice managing cash flow – and learning to live within your means.) Next would be to apply for a student credit card with a $500 limit and manage that wisely. Choose the card wisely – all cards are not equal. Increase your limit when you NEED to only for things you NEED.
This will help you and your students.
I thought the following story from The Wall Street Journal might be of interest as well:
“This Is a Credit Card—Use It Wisely” – The Wall Street Journal
Leave a Comment