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