Building Credit for Teens: A Parents' Guide

From tying shoes to driving cars, you’ve been your child’s primary teacher since day one. But as your teen inches closer to independence, one of the most critical lessons you can pass down is how to build a successful financial future.

Real-world financial freedom starts with understanding personal credit. Teaching your teen how credit works, what factors shape their score, and which common pitfalls to avoid gives them a massive head start before they ever apply for their first loan or credit card.

And we know it takes a village so we’re sharing practical, stress-free tips to help you guide your teen confidently as they kick off their personal credit journey.

Explain To Your Teen What Credit Is

Credit basics are fairly easy to teach to your teen. All you need to do is set aside some time for a conversation and ensure your explanations are simple and easy to understand. Start by defining credit as an agreement that allows your teen to access funds through a personal credit card, which they will repay over time, along with interest, typically in monthly installments.

Encourage your teen to learn some important credit-related terms. Explain that they are the borrower, meaning they take out money in the form of credit from a lender, who is referred to as the creditor. The amount they borrow is called the principal, and they must repay it within a specific timeframe.

One of the most important terms for your teen to learn is interest, the fee a lender charges for borrowing money, usually expressed as a percentage of the principal. Remind your teen that if they don't pay off the full credit card balance, interest will keep adding each month. This could increase their debt, which is the total amount of money they owe the lender.

Use A Relatable Example For Your Teen

One way to explain key credit-related terms is with an example your teen might relate to, such as a purchase. Let's assume your teen has a credit card with a $1,500 limit. In this case, you might say it to them in this manner: “Your credit card has a $1,500 limit. So, if you use your credit card to buy $500 worth of furniture and supplies for college, you will have a $500 credit card balance due on your next statement period. If you repay the entire $500, you won't have to pay any interest. If you make the minimum payment, you will accrue interest.”

Help Your Teen Obtain A Credit Card

Teens under 18 cannot legally obtain a credit card on their own, but many banks and credit card issuers allow teens as young as 13 to be added to their parents' card. Ameris Bank, for example, allows teens under age 18 to be added as an authorized user on a parent's card. This provides an excellent opportunity for young individuals to start building their credit history, provided the account is managed responsibly, meaning no late payments or excessive credit utilization.

When you open a credit card for your teen, they are granted access to your credit line. As such, you must monitor their spending and explain the benefits of responsible credit card use. You might also consider setting a specific limit on your teen's credit card purchases each month, one they can realistically afford to repay. When your teen turns 18 and is ready to apply for their own credit card, they will be familiar with how a card works and understand the importance of making timely payments.

Remind Your Teen Of Common Credit Pitfalls

When helping your teen establish and build credit, it is important to make sure they are aware of these common pitfalls that can negatively impact their credit score:

Late or Missed Payments: Talk to your teen about the importance of making credit card payments on time. Let them know that late or missed payments can hurt their credit score and limit their borrowing. It is also beneficial to set up email and/or text reminders and bill pay features through your bank. This can help your teen stay organized and avoid accidental late payments.

Using Too Much Credit: A credit card often doesn't feel like "real cash," which can lead your teen to overspend on items like fast food, daily coffee or tea, dinners with friends, and even impulse buys such as clothing and gifts. Over time, these frequent purchases can add up to a large credit card bill. It's important to explain to your teen that using too much of their available credit can lead to high levels of debt that are difficult to manage. Additionally, it can signal to lenders that they may be a higher risk.

Falling Victim To Credit Card Fraud: In 2025, approximately 61.3 million Americans were victims of fraudulent charges on their credit or debit cards, resulting in $6.1 billion in unauthorized purchases.1 Because credit card fraud is so prevalent, your teen needs to know how to protect their card from bad actors. Some tips include using strong passwords and multi-factor authentication (MFA), avoiding online purchases on public Wi-Fi networks, and covering the keypad when entering a PIN or password at stores or ATMs to prevent others from seeing it. Lastly, inform your teen never to let anyone use their card.

Consider Co-Signing On A Loan For Your Teen

Once your teen turns 18, they can apply for a personal loan or an auto loan. Their eligibility will depend on various factors, particularly their credit profile, which will influence whether they qualify and how much they can borrow. Since your 18-year-old may not have sufficient credit and income history, they will most likely need a co-signer to apply for a loan.

If you decide to co-sign on your teen's loan application, it’s important to emphasize the significance of making regular, on-time payments. Doing so will help build their credit history and could potentially increase their borrowing limits in the future. If you need more information about loans for 18-year-olds, you and your teen can consult with a banker.

Set Up Bank Accounts For Your Teen

While a checking account or savings account does not show up on your teen's credit report or influence their credit score, these accounts can help them develop good budgeting and money management skills. A bank account offers your teen a secure place to save money from summer jobs, part-time work, allowances, or gifts they receive. By making deposits and observing their account balance increase, your teen can build a sense of financial responsibility and achievement.

You might consider helping your teen open both a checking and a savings account, as each serves different purposes and offers distinct benefits. With a checking account, your teen can track cash flow, pay bills, and manage direct deposits. With a savings account, such as a Minor Savings Account from Ameris Bank, your teen can save money for the future and set realistic savings goals.

Plus, access to a checking and savings account can help your teen become familiar with modern banking tools such as mobile apps, direct deposit, digital wallets, online bill pay, and Zelle® transfers.

¹ https://www.security.org/digital-safety/credit-card-fraud-report/

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.