By building good credit in their youth, adults will have better opportunities in most financial decisions like cars and houses when they finish their respected education.
Any kid that watches television or videos with ads will probably have experienced advertisements by companies trying to sell their credit cards, free credit scores and credit score boosters. Students at Pleasant Valley receive education about credit solely from personal finance it is mentioned scarcely in economics leading to limited exposure to credit.
The loose definition of credit goes along the lines of a lender giving out money in good trust to another person or company. That trust is usually based on a credit score. A credit score measures a person’s payment history, spending and new credit. The higher the score, the better the credit. Building good credit helps to get lenders that will often be more trusting with their money in customer loans.
Without good credit, people lose access to many potentially advantageous options. John Pierce, a recent college graduate, attempted to buy his first house after having an apartment. Pierce said, “I tried to buy my first house which was in my price range, but unfortunately we had to buy the house under my wife’s name because my credit score was too low from never using my credit card.”
Even if someone has millions of dollars, if they have never touched but has never touched a credit card or loan, it can be impossible to get a lender to offer their money. Good credit opens many doors for people. Low-interest rate loans for cars and homes, perks from credit card companies, and other services based on credit scores are all examples of things only available to those with good credit.
Students have many opportunities to start building credit as teenagers to start building credit as a teenager. Teenagers can either become an authorized user on their parents’ card or can apply for a secured credit card for themselves. While being able to operate their parents’ credit card is good practice for managing money, students do not gain experience paying for their own expenses this way–another vital piece to having good credit. It also leaves them open to a credit score hit if their parents do not pay the bill.
Many teenagers in high school have debit cards for non-cash purchases. Mitchell Strobbe said, “I mostly have a debit card because it has a lot less complicated steps.” However, he is a senior this year and will be facing adult financial decisions. Strobbe said, “I’m probably going to apply for a credit card soon because I actually want a credit score after college.”
Even though credit cards provide an additional risk to the student, it allows kids one way to start building credit which is vital in most major financial decisions in life. Without good credit, young kids are starting life at a disadvantage, which could have been avoided in their youth if the proper steps were taken.
