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

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Susan Beacham
Written by Susan Beacham
Susan Beacham founded Money Savvy Generation in 1999 after almost two decades in private banking and investment management complemented by considerable time teaching at the elementary level.

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