If you have an old or expired credit card, you might shred or otherwise dispose of it. Most credit cards come with an expiration date printed on the face of the card alongside the credit card account numbers. If you keep your account open, you’ll usually get a new card in the mail before your previous card expires.
When you get your new credit card or if you’ve decided to close your account, you’ll want to be careful about what to do with your expired credit card. There are a few things to keep in mind to make sure you keep your financial information safe.
Things to Do With an Old or Expired Credit Card
If you have a credit card that’s closed or has passed its credit card expiration date, here are some options to consider as you decide what to do with the card.
Shredding Your Credit Cards
The simplest thing you can do after closing a credit card is to shred it. Most modern shredders have the ability to shred plastic credit cards in addition to paper. If you don’t have a shredder, you can cut your card into multiple pieces with scissors.
You might consider putting each piece of your card in a different trash can or trash bag. This will minimize the chance that someone might be able to reconstruct your full account number.
Disposing of Metal Credit Cards
It gets a little more complicated if you’re disposing of a metal credit card. Most retail shredders will not be able to handle shredding a metal credit card. If you have an expired metal credit card, you can try the following:
• Cutting it up with metal snips
• Turning it in at a physical bank branch
• Sending it back via certified mail to your credit card issuer
Contacting Expired Credit Card Hobbyists
Believe it or not, there are people who collect old credit cards as a hobby. They may do so because they are fascinated by the history of credit cards. While you might not feel comfortable having your credit card and account information in the hands of someone else, if you are, there may be someone who would want to have it.
Just keep in mind that while there are some old or historical cards that have actual value as collectibles, most current credit cards won’t be worth anything to a collector.
Deactivating Magnetic Strips and Chips
As part of the process of destroying a credit card that’s past its credit card expiration date, it’s not just the account number that you’ll need to take care of. Most credit cards have either a magnetic strip or an EMV chip (or both) that contain account information that you’ll need to make sure is destroyed.
If you have a contactless credit card, remember that it also contains potentially sensitive information.
Keeping Your Card Out Of The Recycling Bin
Above all else, don’t just throw your card in the recycling bin. While most credit cards are plastic, that doesn’t mean they can be recycled as-is. Check with your local trash or recycling authority to see if credit cards can be recycled. Even if your card can be recycled, it’s not a great idea to toss it in the recycling bin whole due to security risks.
Things to Do Before You Close Your Credit Card Account
It can be difficult to know when to cancel a credit card due to the implications it can have for your credit score. Especially if the account you’re thinking about closing is one of your older ones, it can impact the length of your credit history. As this is a factor that goes into determining your credit score, canceling a long-standing card could cause your score to drop.
So before closing your credit card account, consider the following options first.
Downgrade Your Card
Instead of closing your credit card account, you might consider downgrading your account to a different type of credit card. Most credit card issuers have a variety of different cards, so you might find one that’s a better fit for you. Plus, keeping your account open can help maintain your average age of accounts.
A secured credit card can make sense if you have a limited credit history or are working on rebuilding your credit history. But once you have an established history of adhering to credit card rules like making on-time payments, you may be able to qualify for an unsecured card.
Keep Your Card for Small Purchases
It may make sense for you to keep your credit card and use it to make small purchases here and there, especially if it doesn’t have an annual fee. Keeping a credit card open can help you maintain your average age of accounts, especially if the card is one of your older ones.
Just keep in mind that if you do decide to keep it open, you may want to make occasional small purchases on it. Otherwise, your credit card issuer may close it for inactivity.
If you have an old or expired credit card, it’s important to take the necessary steps to keep your financial information safe. In most cases, it’s a good idea to shred your expired card so that nobody can access your information. You might also just keep your credit card account open to avoid lowering your average age of credit accounts.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Can an expired credit card be charged?
In most cases, if you try to make a purchase after your credit card’s expiration date, it will be declined. Keep in mind, though, that merchants may continue to attempt to charge a card after its expiration date if you have it set up for recurring charges. Check with any merchants where you have recurring charges to see how this might affect you.
Can I cancel a credit card online?
Yes, in most cases you do have the ability to cancel a credit card online. You could do so through your online account or possibly by using a chat feature on the card issuer’s website. If you’re not able to cancel your credit card online, you may have to call the customer service number on the back of your card to cancel your card.
What should I do before canceling a credit card?
Knowing when to cancel a credit card is a matter of balancing a variety of different factors. Before canceling a credit card, make sure that it won’t drastically affect your credit score. You’ll also want to contact any merchants where you have recurring charges to update your account information. That will ensure that you don’t have any interruption in service.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
The average credit for 30-year-olds is 690, according to the most recent analysis of FICO® scores in 2024 by Experian.
Knowing how you compare with other borrowers is an interesting way to look at your finances. Perhaps you want to improve your credit score, or maybe just you’re wondering if your credit score is good enough to secure the financing you want. Either way, a better credit profile could translate into better lending terms and, ultimately, more money back in your pocket.
Here’s what you need to know about average credit scores by age 30 and steps you can take to boost your score.
Key Points
• The average credit score for 30-year-olds is 690, which is slightly below the national average of 717.
• A credit score of 690 is considered “good,” allowing individuals to qualify for mortgages and loans.
• Credit scores range from 300 to 850, with higher scores typically providing better loan terms.
• Factors such as payment history, credit utilization, and credit history length affect credit scores.
• Understanding credit scores can improve financial health and secure better lending terms.
Average Credit Score by Age 30
As mentioned, the average credit score for Millennials is 690. This is slightly lower than the national average FICO Score of 717, but that’s to be expected. After all, it takes time to build good credit, and a borrower’s credit score tends to increase with age.
If you have an average credit score of 690 by age 30, it falls within the “good” range. This means you’ll likely be able to qualify for a mortgage, car loan, and other types of financing applications, though you may not be offered the most favorable terms. (Saving up for a big-ticket item? A spending app can help you track savings and stay on top of recurring expenses.)
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What Is a Credit Score?
Taking a step back, it’s important to understand what a credit score is and where it comes from. A credit score is a three-digit number that lenders use to assess how risky it is to loan money to a borrower. Scores range from a low of 300 to a high of 850. In general, the higher your credit score, the more likely you are to get the best interest rate and loan terms.
There’s no starting credit score for those just starting to establish their credit history. The two main players — FICO and VantageScore — each look at a variety of factors to come up with a person’s credit score.
As of October 2023, the national average credit score across all ages is 717, according to FICO. That’s one point lower than earlier in the year, which could be the result of months of high interest rates and inflation. That said, 717 falls easily within the “good” credit score range and could help you qualify for more favorable lending terms.
Average Credit Score by Age
When broken down by age, you’ll find the average credit score as follows:
Age
Credit score
Generation Z (18-26)
680
Millennials (27-42)
690
Generation X (43-58)
709
Baby boomers (59-77)
745
Silent generation (78+)
760
Source:Experian
What’s a Good Credit Score for Your Age?
It’s common to want to see how your personal, professional, or financial track record compares to your peers. But that may not be the best approach for assessing your credit score. Instead, it can be helpful to see where your score falls on the standard 300-850 scale. A credit score of 670 or higher is generally considered good, regardless of a person’s age.
How Are Credit Scores Used?
Credit scores can be used in a number of ways. Let’s look at some common scenarios when your credit score may come into play:
• You’re applying for a loan. Whether you’re applying for an auto loan, mortgage, or personal loan, a lender will use your credit score to determine the risk associated with loaning you the money.
• A lender is determining your interest rate. Generally speaking, the better your credit score, the better interest rate you’ll be offered.
• A lender is setting your credit limit. The amount of credit you qualify for is based in part on your credit score. If you manage your credit well, you might qualify for a higher credit limit.
• You’re applying for car insurance. When quoting a car insurance rate, insurers often factor in your credit score along with other factors, like your driving history.
Factors Influencing the Average Credit Score
According to Experian, the average credit score has generally trended upward over time. This can be explained by a number of factors, including:
• Education. More people are aware of their credit scores and are paying their bills.
• Age. Data shows a direct correlation between higher credit scores and older generations.
• Economics. Experian data scientists point to steadily decreasing unemployment levels as one reason for the upward trend of credit scores.
• Credit utilization. Overall credit utilization ratios have increased to 30% (up from 28% a year ago) for all borrowers, which affects the average credit score.
• Delinquencies. Mortgage delinquencies are lower than they were before the pandemic, which could be a result of the low interest rates that were offered.
If your credit score isn’t where you want it to be, take heart. There are steps you can take to help boost your numbers over time.
• Pay your bills on time, every time. Whether you use a money tracker app to manage upcoming bills or go the autopay route, find a bill paying system that works for you.
• Manage your credit utilization. Lenders look at how much of your available credit you’re using. By paying off debt, you can lower your credit utilization ratio, which in turn can help improve your score.
• Keep accounts open. A long credit history can help strengthen your credit profile. If you have an older account in good standing, consider keeping it open.
• Check your credit report regularly. Mistakes happen. If one ends up on your credit report, take steps to address it right away. It’s a good idea to keep an eye on your credit score as well. You can get your score for free through banks, credit card issuers, and Experian.
How Does My Age Affect My Credit Score?
Technically speaking, your age doesn’t affect your credit score. However, credit scores do tend to increase with age. That’s because the longer a person lives, the more opportunities they have to build up a credit history, earn a higher income, and pay off debts.
At What Age Does Credit Score Improve the Most?
According to Experian’s 2023 findings, credit scores tend to improve the most between the ages of 59 to 77, when many Americans are either starting to think about retirement or settling into their golden years. (The average credit age among this age group is 745, which is considered very good.)
One possible explanation for the jump is that older people may have older credit accounts in their credit profile and, as a result, enjoy a higher average age of accounts. Also, people 59 and older typically have a more stable income and lifestyle, both of which can make bill paying and money management easier.
What Factors Affect My Credit Score?
Understanding what factors impact your credit score can go a long way toward helping you maintain a good score. Note that FICO and VantageScore use different factors and weightings when calculating a credit score. Let’s take a look at what goes into both scores.
A FICO Score, which is used in 90% of lending decisions, considers how a consumer handles debt. It weights scores according to the following categories:
• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• New credit inquiries (10%)
• Credit mix (10%)
Though there’s some overlap with FICO, a VantageScore is based on the following categories:
• Payment history (40%)
• Depth of credit (21%)
• Credit utilization (20%)
• Balances (11%)
• Recent credit (5%)
• Available credit (3%)
As you can see, while the weighting is different, both models pay close attention to how much credit you’re using, how well you’ve been paying on it, and how long you’ve been managing credit.
How to Build Credit
No matter how old you are, there are plenty of ways to build credit. As previously mentioned, on-time bill paying and a low credit utilization rate can both go a long way toward boosting your credit profile. But here are some other strategies to consider as you establish your credit.
• Become an authorized user. If someone is willing to take you on as an authorized user (your parents, for example), their payments may be reported on your credit history.
• Apply for a beginner credit card. A couple of options to consider: a student credit card, which is an unsecured card to help college students build credit, or a secured credit card, which requires a cash deposit as collateral.
• Consider a credit builder loan. A credit builder loan takes the loan amount and deposits it into a savings account for you. You’ll repay the loan in installments, and once it’s paid off, you’ll receive the money. On-time payments are reported to the credit reporting agencies.
• Look into an installment loan. Auto loans and personal loans are examples of installment loans that can help a qualified borrower build up their credit history.
• Enroll in a program that reports rental or utility payments. Find a service that reports your monthly rent or utility payments to the credit reporting agencies. Some services are free, but others may charge a fee.
Credit Score Tips
Looking for ways to help improve your credit score? Keep these tips top of mind:
• Stay on top of bill paying.
• Pay down debt.
• Keep track of your credit score and review your credit report at least once a year.
• See an error in your credit report? Dispute it with each credit bureau that has the mistake as well as the business that reported the inaccurate information.
• Write a goodwill letter to the creditor asking for negative (but accurate) information to be removed from your credit report. They’re under no obligation to honor your request, but it’s worth a shot.
The Takeaway
The average credit score by age 30 is 690, which is slightly lower than the national average score of 717. However, a borrower’s age doesn’t directly impact their credit profile. Rather, data shows that the older someone is, the more likely they are to have a higher credit score. That’s because they’ve had more time to build up their credit profile.
Regardless of your age, there are ways to help boost your credit score and potentially qualify for better lending terms. Some strategies include paying bills on time, managing how you use your available credit, and keeping older accounts that are in good standing open.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
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FAQ
What is a good credit limit for a 30-year-old?
The average credit limit for all credit cards for people in their 30s is $27,533, according to Experian.
Is 700 a good credit score for a 25-year-old?
A credit score of 700 at any age is considered good.
Is $10,000 a high credit limit?
Ten thousand dollars can be considered a good limit for people who have managed their debt and credit cards responsibly. To put that amount in perspective, the average limit for all credit cards combined is $29,855, according to Experian.
What credit limit can I get with a 750 credit score?
A 750 credit score is a good credit score, but it’s not the only piece of information lenders use to determine your credit limit. They consider a number of other factors, including your payment history, income, and credit utilization.
Can you have a $100K credit limit?
Though not common, it is possible to find a credit card with a limit of $100K. However, you’ll likely need to have good credit and demonstrate that you have the financial resources to support repayment. For example, a business that earns millions of dollars each year and has employees as authorized users on the card may be granted a higher credit limit.
What is a good credit score to buy a house?
In general, you’ll need to have a credit score of at least 620 to qualify for many types of mortgages.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
If you’re wondering whether financing a phone builds credit, the answer is that it depends. In some cases, financing a phone may help you build credit — but only if the financing company reports your payment activity to the credit bureaus.
Further, you’ll need to consistently make on-time payments if you’d like to build your credit. If your phone account ends up in collections, that will have the opposite effect on your credit. Here’s a closer look at how financing a phone can affect credit.
Key Points
• Financing a phone can build credit if the financing company reports payment activity to credit bureaus, which can help build credit scores.
• Consistently making on-time payments is essential for positively impacting credit scores through phone financing.
• Financing through major phone manufacturers or third-party companies often helps build credit, unlike most wireless carriers.
• A hard credit inquiry during phone financing may temporarily lower credit scores, but consistent payments can offset this.
• Verifying whether the financing company reports to credit bureaus is important for using phone financing to build credit.
How Does Cell Phone Financing Work?
Think of cell phone financing much like taking out a loan. But instead of getting funding, you’re getting a cell phone that you will then pay off over time.
Some people may decide to go this route if they don’t have enough money saved to buy a new phone outright. Others may even choose to lease a new phone, which entails making monthly payments that allow for an easy upgrade to a newer phone on a more regular basis.
When financing a phone, you’ll most likely sign a contract outlining the value of the phone and the payment terms, such as the monthly amount due and the term length.
Cell Phone Financing Options
You can find different cell phone financing options, including through your wireless carrier, phone manufacturer, or a third-party company. Depending on which option you choose, you may undergo a hard credit inquiry when you apply for financing. This could temporarily affect your credit score, given new credit is one of the factors considered in determining your FICO® score.
When you purchase or lease a phone through your wireless carrier, you’ll most likely be presented with different payment options. If you’re purchasing a phone, you may be able to sign up for a monthly payment plan — sometimes without incurring interest. You may even be able to negotiate a discount if you’re a repeat customer or choose certain wireless plans.
For those who want to lease, your wireless carrier may offer options like the ability to periodically upgrade your phone by trading in your existing phone for a newer model. Or, you may be offered the choice of buying the phone after a certain amount of payments.
Whichever option you choose, know that sales tax may not be included in your monthly payment — you’ll need to pay that upfront. Plus, you may need to make a down payment depending on your credit profile. Those with good credit, as opposed to a bad or fair credit score, may secure more favorable terms.
Major phone manufacturers like Apple and Samsung typically have their own installment plans to purchase their phones. With these plans, you’re approved for a certain amount that you can use to finance a phone, which you’ll then pay off over time.
Like wireless carriers, some phone manufacturers have the option to upgrade to a newer model by offering credit for trading in your existing phone. In some cases, you may be charged interest, so it’s best to review the terms before committing to a plan.
Some electronics stores offer financing for cell phones if you open a store credit card and use it to purchase a phone. You may be able to make interest-free monthly payments if you pay for the phone in full within a certain period of time.
Many retailers offer buy now, pay later options. Some don’t charge interest as long as you meet their payment terms. However, there can be fairly high late fees, so check the terms and conditions before proceeding.
Cell Phone Financing Options That Build Credit
Not all cell phone financing options help you build credit. That’s because not all companies that provide financing will report your payment activity to the major credit bureaus. As such, that information won’t get added to your credit report.
That being said, there are ways that financing a phone can help you build or establish credit. This includes the following:
• Financing through a phone manufacturer: Major phone manufacturers have their own branded credit cards or financing accounts on which they will report your activity to the credit bureaus. As long as you keep making on-time payments, this can help to build your score. To ensure your payment activity will affect your credit, it’s best to check with the manufacturer.
• Financing through a third-party company: Many stores offer branded credit cards that you can use to finance your phone. This is another way that financing a phone can build credit, since the company will generally report your payment information to the major credit bureaus.
Cell Phone Financing Options That Don’t Build Credit
In most cases, financing a phone through your wireless carrier won’t help you build your credit. That’s because these companies most likely won’t report your payment activity to the credit bureaus. If your payment activity does not appear on your credit report, it won’t have an effect on your credit.
For similar reasons, buy now, pay later plans also usually don’t help you build credit.
Should You Finance Your Phone to Build Credit?
Financing a cell phone in order to build credit is best for those who are able to consistently make on-time payments. That way, this positive payment activity will get reported to the credit bureaus and help to build your score.
However, if you’re unsure whether you’ll be able to do so, it may make sense to find an alternative way to build credit. Even one missed payment could negatively affect your credit and land you in more debt than you’d originally anticipated.
Is Financing a Cell Phone Worth It?
Financing a phone can come with some advantages, such as freeing up cash you can use to fund other financial goals. If you can get financing with zero interest and know you’ll be able to pay off your phone in full within the agreed-upon terms, then it may be worth considering if you want to have more cash available to you. If your financing plan doesn’t have a prepayment penalty, it can even give you the flexibility to pay off the phone early if you want.
However, if you need to pay interest or you believe that you won’t be able to pay off the phone within the zero-interest period, you’ll need to carefully consider the financial repercussions. Interest charges can add up, so look at your budget to see whether you can truly afford the phone you want.
If not, it may be worth holding onto your phone until you can save up for a new one or choosing to finance a phone that costs less.
Other Ways to Build Credit
Financing a phone isn’t the only way to build credit. Some of your other options include using a credit card responsibly and taking out a personal loan.
Using a Credit Card Responsibly
Using a credit card responsibly can help you build credit. Because payment history is the biggest factor in what affects your credit score, making timely payments on your credit card balance can go a long way toward building your credit score.
Plus, if you pay for your cell phone with whichever type of credit card you have, you might secure cell phone insurance coverage. See if your card offers that as a perk.
Getting a personal loan is another way to potentially build credit. How personal loans can build credit score is through on-time payments you make on the loan, since lenders will report your activity to at least one credit bureau.
Before taking out a loan, however, check the terms carefully. You’ll want to look at what interest rate you’ll be charged and what your monthly payment amount will be.
The Takeaway
Financing a phone can help you build credit, as long as the financing company reports your payment activity to credit bureaus. You will need to check with the lender to learn what their policy is. If they don’t report to the major credit bureaus, you may want to consider other ways to finance your cell phone and help build your credit.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Do cell phone financing options report to credit bureaus?
Some financing providers report payment activity to the credit bureaus, while others don’t. For instance, wireless carriers most likely won’t report payments on cell phone financing, whereas phone manufactures and some electronics stores do.
Does upgrading your phone affect your credit score?
Upgrading your phone may affect your credit score if the financing company needs to conduct a hard credit inquiry before approving you for a phone. A hard credit inquiry typically lowers your credit score slightly for a brief period of time.
How long does a phone bill stay on your credit report?
Active accounts can stay on your credit report for as long as the account is open and being reported to the credit bureaus. If you have a charged-off account — meaning your creditor has tried to collect payment from you and failed — that information may remain on your credit report for seven years.
Photo credit: iStock/Delmaine Donson
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Establishing a robust credit profile takes time, so teaching your children how to start building credit at 18 or even younger can help them get ahead. Building a positive credit history can play a key role in accessing competitive borrowing opportunities in the future.
If you have a teen or early-adult child, there are a few ways to help them establish credit at age 18. This can include getting a secured credit card, becoming an authorized user, or implementing other strategies.
Key Points
• Starting to build credit at 18 can help provide access to future borrowing opportunities.
• Becoming an authorized user on a parent’s credit card can help establish credit early.
• Secured credit cards are a good option for beginners seeking to build credit.
• Third-party services can help new users build credit by reporting non-traditional payments.
• Early credit building can positively impact credit scores, affecting future financial opportunities.
What Is Credit and How Does It Work?
When a person purchases an item on credit, they aren’t using money they already have. Instead, they’re borrowing the funds to make that purchase and promising to repay the amount, plus interest, in the future.
A credit history is a complete record of a consumer’s installment loans and revolving credit accounts. It logs data about the type of credit that’s borrowed, their amounts, the lender that issued the credit, whether payments were made on time, and each account’s status.
Creditors report this data to the three major credit bureaus: Experian®, Equifax®, and TransUnion®. Activity is submitted at regular intervals as soon as a consumer submits an application, and as long as the account is active. Data is also reported when an account is closed.
Why Is It Important to Start Building Credit Early?
The earlier your child builds their credit, the more time they have to establish and positively impact their credit history and their scores. Credit scoring models, like the commonly used FICO® score, will use your child’s credit history to calculate their credit score.
This score is like a snapshot of your child’s creditworthiness. Businesses and lenders may refer to that score when evaluating your child for future jobs, apartment rental applications, and new loans and credit cards.
One of the easiest and best ways to start building credit at 18 for your child — and sometimes younger, depending on your card issuer — is by adding them as an authorized user. As an authorized user, your child will be able to make purchases using the card, with the primary account holder remaining liable for monthly payments.
If you have a credit card in good standing, making your child an authorized user on your account lets them reap the benefits of your positive borrowing habits. See if your card issuer allows authorized users (different types of credit cards may have different policies). Also double-check if it reports the account’s data to the credit bureaus for all users under the account.
Your credit card company might have a minimum age requirement for card users (and it often differs from the age to get a credit card independently). If your child meets the issuer’s requirement, your continued good borrowing activity on the card will get reported to credit bureaus to develop their credit file.
2. Work a Student Loan Into Their Education Financing Strategy
Talk to your college-bound high school graduate about strategically using a student loan to pay for some of their higher education costs. Student loans are installment loans in which your child is the primary borrower. They’re designed to cover school-related expenses and are paid back over time.
Some students might be eligible for a federal student loan, which offers fixed interest rates and borrower protections, like student loan forgiveness as well as flexible repayment and forbearance options. Although payments can be deferred on federal student loans while your child is in school, making payments during school can help them establish credit early on through student loan payment data.
Getting a credit card for the first time can be an overwhelming process for your 18-year-old. There are many types of credit cards on the market with varying benefits. A credit card for individuals who are new to credit, like a secured card, might be an effective way for your child to initiate their credit history.
With a secured card, your child will need to provide the card issuer with a deposit that sets the card’s borrowing limit. Since the issuer uses the deposit as collateral for the account, it can be easier for individuals without credit to qualify. As your child uses the card and makes on-time monthly payments on the account, that data is reported to the credit bureaus.
If your child is moving into their own apartment or has done so already, look into whether their landlord is willing to report their rental payment history to the credit bureaus. Additionally, other types of non-traditional payment data can be reported to the credit bureaus by utility service providers.
Your child also might look into a service like Experian Boost®, which is offered by the credit bureau Experian. This service helps individuals who are new to credit start their credit history by accounting for payments toward services, like cell phone and streaming plans.
The Takeaway
Helping your child understand how to build credit at 18 can help them access favorable borrowing opportunities later on. That is, assuming they maintain positive borrowing habits once they have credit accounts of their own, like making payments on time and not taking on too much debt. Strategies can include getting their own credit card or becoming an authorized user on a family member’s card.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Can you build your credit before 18?
Yes, parents can help their child’s credit during their high school years by adding them on their credit card account as an authorized user. Depending on the credit card, there might not be an additional fee for adding an authorized user, though some card issuers do charge an annual fee per card user.
What credit score do you start with at 18?
If at 18 years old, a consumer hasn’t had a credit account, they simply won’t have a credit score at all since a credit score of “zero” does not exist. The lowest FICO score possible is actually 300, but a person’s starting score is typically higher than this, unless they’ve already demonstrated poor borrowing behavior early in their credit-building history.
When should I get my first credit card?
There’s no one “right age to get a credit card”; however, card issuers typically set a minimum age requirement of 18 for their card users. Parents can help their child access their first credit card as an authorized user, sometimes before the age of 18 years old. As an authorized user, your child can make purchases on your card, and start building their credit without being liable for monthly payments.
What is the fastest way to build credit at 18?
One of the fastest ways for parents to help their 18-year-old child build credit is by adding them to the parent’s existing credit card account as an authorized user. As parents make on-time monthly payments for at least the minimum amount due, some card issuers report this positive payment data to the credit bureaus for all users listed on the account.
Photo credit: iStock/PeopleImages
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Figuring out whether you will get approved for a credit card is seemingly simpler now with credit card approval odds calculators. These tools can offer guidance, highlighting credit cards with high approval odds in your favor. However, they are not always reliable.
It can be helpful to also understand the key factors that can help make you a more desirable borrower for credit card companies, thus increasing your future approval odds.
Key Points
• Credit card approval odds calculators estimate approval chances but are not always reliable.
• Factors affecting approval can include credit score, income, debt-to-income ratio, and credit utilization.
• Prequalification offers indicate better approval odds but do not guarantee approval.
• Comparing credit cards involves evaluating APRs, fees, rewards, and other features.
• If an application for a credit card is denied, options can include appealing the decision, building credit, or applying for a secured credit card.
What Are Credit Card Approval Odds?
Credit card approval odds inform you of the likelihood that you’d get approved for a particular credit card. How these approval odds are determined, including which details are assessed, can vary between services and card issuers.
For example, a credit card approval odds calculator might suggest that, based on your credit score and income, you have an 80% chance of getting approved for a credit card. It might also offer you a few credit cards with high approval odds to explore.
Checking Your Credit Card Approval Odds
Using a credit card approval odds calculator offers a glimpse of your approval chances, but not a promise. That’s because a credit card company or credit card marketplace can’t provide a 100% assurance of your approval without going through a formal underwriting process.
Underwriting is the step where a lender or issuer evaluates your credit portfolio and application details (like existing debt and income) to calculate whether it would be a risk to extend credit to you. Since this process can only happen after an application is submitted, a tool that states you have high approval odds doesn’t mean your eventual approval is guaranteed.
Prequalifying for a Credit Card Approval
There are a couple of ways to obtain a pre-screened credit card to gauge your approval odds: Receiving a prequalification offer or requesting a prequalification from a credit card issuer.
Using a Prescreened Offer
Based on your general information from the credit bureaus, card issuers might send you an unsolicited prescreened offer stating that you might be qualified for its credit card.
At this step in the process, the card company has only looked at limited markers, like whether you’ve met its minimum credit score requirement. It hasn’t performed a hard credit check nor evaluated your existing debt or income to base an approval on. However, if you receive a prequalification offer, this can be a positive sign that your approval odds are better than if you hadn’t received it.
Checking the Card Issuer’s Website
You don’t always have to cross your fingers in hopes that a card issuer will give you a prescreened offer. Some credit card issuers offer a prescreening form that you can fill out to see if you’re prequalified for its card. If your preferred card doesn’t let you request a prequalification, you might find more insight on the issuer’s website about what’s required for approval.
While you’re on the card issuer’s site, it’s helpful to review its response timelines so you can track your pre-qualification or application progress. This includes the timeline for an application decision, as well as how long it takes to get a credit card if you’re approved.
What To Do if You Prequalify
If you prequalify for a credit card, you can choose to submit an application. Doing so will require a hard credit inquiry before a decision is made, which can temporarily have an effect on your credit score.
Additionally, you can continue shopping around for different cards to see if another product offers a lower interest rate or better incentives.
If you don’t prequalify for a credit card, you can proceed in a few ways:
• Hold off on getting a new card. Too many hard credit inquiries might flag you as a high-risk borrower who’s reliant on credit. If you’ve recently had multiple inquiries on your credit, consider waiting a couple of months before re-applying for a new card.
• Build your credit score. Card issuers typically look at your credit score to see if it meets its minimum requirement. A higher credit score is a positive indicator that you’re a responsible borrower.
• Apply for a secured credit card. A secured credit card can be a credit-building card in which you deposit money or collateral in a certain amount. This amount acts as your credit limit.
• Appeal the decision. If you applied for a credit card and were denied, the issuer must legally inform you of the reason for the denial. If you can provide more information that might sway the issuer in your favor, you can ask them to reexamine your application.
Whether you’re getting a credit card for the first time or adding a new card to your rotation, there are a few steps you can take to improve your approval odds.
Reviewing Your Credit Report
Your credit report gives credit card issuers a comprehensive view of your borrowing habits to date. Since it’s a highly scrutinized factor when approving applications, review your credit report before submitting an application.
Check that all accounts, their statuses, and the amounts are accurate. If you spot an account that looks outdated or incorrect, reach out to the credit bureaus immediately to dispute it.
Taking a Look at Your Credit Score
In addition to ensuring your credit report is accurate, evaluate where your credit score stands today. Credit scores are the most common credit card requirements that influence your approval odds. For instance, if a card issuer explicitly states that its minimum credit score required is 720, but your score is 650, your credit card approval odds might be low.
Keep your debt-to-income (DTI) ratio as low as possible. Credit issuers use this ratio as a way to determine whether you can afford to pay back potential purchases made on the card. The ratio is based on your aggregate monthly debt amounts divided by your gross monthly income.
Stating All of Your Income
As mentioned above, your income is one of multiple factors used to determine your credit card approval odds. A higher income can reduce your DTI ratio, making you a less risky customer to extend credit to.
You can include various types of income sources on your application. This might include your salary from your full-time job, earnings from a side gig, Social Security benefit payouts, and alimony.
Managing Payment History and Credit Utilization
Staying on top of your existing loan and credit card payments keeps your credit score healthy. This means paying at least the minimum amount due, and making those payments on time every month.
Additionally, be aware of how much of your total credit limit you’re using, compared to how much credit you have access to. This ratio is called your credit utilization ratio. The lower it is, the better. Many financial experts say that no more than 30% or, better still, less than 10% is a good number.
With so many credit card products on the market, choosing a credit card that suits your borrowing needs and qualifications can help you find the right card.
Ensure you’re comparing credit cards with the same credit card features between different cards to accurately determine their pros and cons. Some considerations to make when comparing credit cards include:
• APRs. The annual percentage rate, or APR, is how much you’ll pay in interest if you carry a balance on the card. The lower the interest rate, the better.
• Balance transfer costs. Some issuers offer a zero-interest balance transfer promotion for a limited period, while others don’t. Similarly, some credit cards charge an additional balance transfer fee.
• Penalty APRs. If your account becomes delinquent, some card issuers impose a higher penalty APR on your existing balances and future transactions. Make sure you understand how a credit card works and which rules apply.
• Fees. Certain cards charge an annual fee just for the privilege of carrying the card. This fee is in addition to interest charges you might pay for rolling over a balance, month over month.
• Rewards program. If you’re after credit card rewards, compare the details of each card’s program. For example, look at whether rewards points or miles are tiered or offered for specific categories or if there’s a flat rewards rate for all purchases.
• Incentives. You might encounter special promotions, like a welcome bonus or promotional 0% APR. These added perks can factor into your decision.
The Takeaway
Although a credit card approval odds tool can offer broad guidance about whether you’ll be approved for a credit card, it doesn’t replace a card issuer’s underwriting criteria. The credit card company relies on its own underwriting team and algorithms to ultimately decide whether your application is approved. This decision is based on the specific information on your application and your creditworthiness.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Does getting rejected for a credit card hurt my credit?
It depends on the specifics of how you are rejected. A credit card preapproval rejection typically doesn’t hurt your credit since preapprovals usually involve a soft credit check. However, if you move forward with a credit card application that involves a hard credit inquiry, your credit score might temporarily drop, regardless of whether you were approved or denied.
Are credit card approval odds accurate?
Generally, credit card approval odds calculators don’t provide a 100% guarantee that you’ll be approved. There have been reported cases of tools claiming that a consumer has high approval odds for a card, only to get denied upon applying. The card issuer is the only entity that can accurately say whether you’re approved for a credit card.
How can I improve my credit card approval odds?
The best way to get good approval odds for credit cards is to minimize high-risk borrowing practices. One way to achieve this is by building your credit score. Keep your credit balances low, make timely monthly payments, maintain long-standing credit accounts, and avoid opening multiple new lines of credit in a short period.
How do you guarantee credit card approval?
There’s no way to absolutely guarantee credit card approval to any particular card. Card issuers base their decisions on a number of factors, like your credit history, credit score, income, credit utilization, debt-to-income ratio, and more.
Photo credit: iStock/akinbostanci
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
