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The Most Important Mistakes Your Child Should Avoid When They Start Building Credit At 18

As a organization centered around finance, we’ve done a few blogs already on the idea of building credit immediately when you are legally allowed to do so at 18 years of age. 

If you’ve got no idea what we’re talking about, please check out our previous blogs titled “tips for managing credit cards responsibly” and “why 18 is the right age to start building credit”.

Anyways, in today’s blog, we want to expand on the idea of giving your child the responsibility of a credit card once they turn of age. 

Read on to find out more about the four most important mistakes your child must avoid when starting to build their credit at 18 years old.

1. Late Payments

35% of your credit score is based on your payment history. In other words, the largest single factor in determining whether financial institutions like a bank will trust in you enough to provide you with help for big ticket purchases like a car or a house has a lot to do with if you pay off the credit you borrow on time. Accordingly, it is important that your child learn how imperative it is to avoid the mistake of late payments when they are building up credit.

magnifying glass on top of money on top of a calculator 

2. Using Too Much of Your Available Credit At Once

The next biggest part of determining your credit score is how much you owe. This accounts for about 30% of your credit score. If you consistently appear close to maxing out your credit limit, creditors and lenders will likely deem you as being at a higher risk of not being able to handle more borrowed money. This will have a rather significant impact on your child’s credit, making it an important mistake to avoid from the moment they are able to do so.  

3. Having Too Short of A Credit History

The length of an individual’s credit history, assuming they have maintained a good standing with few to no late payments, is another good indicator of their consistent ability to use credit responsibly. Conversely, then, too short of a credit history makes your child’s trustworthiness much more difficult to gauge for a creditor, which shines a bright light on the importance of ensuring your child actually uses their credit when they have it as opposed to just letting it exist. 

 blank notepad with three small pencils laid out to the right of it

4. Applying For Credit Too Often

We just talked about why it is bad to simply let credit “sit there” and why your child must use their credit progressively in order to build it up properly. However, we also need to caution against making the mistake of applying for too much credit. In a lot of ways, frequently applying for new credit can signal financial difficulty and impact the perception you have with creditors and lenders. Therefore, while it is important that your child learns to use their credit in order to build it up in a healthy way, it is also imperative that they do not go overboard and start applying for a plethora of credit cards because this can reflect really poorly on them in the future.

Together with the other two blogs we’ve linked above, we sincerely hope that our content can help you put your young child in an advantageous position now so that they can become as financially literate and independent as possible in the near future. 

With that said, however, we would definitely understand if our written content alone does not satisfy your desire to grow your child’s level of financial literacy, and that is why we would like to remind you about our globally-acclaimed personal finance programs here at Explorer Hop. 

money growing

Our nationally and internationally-renowned programs are designed and curated to help children in grades one all the way to twelve learn about a variety of topics from the basics and history of money to the stock market and global finance, so we encourage you to check out our courses on our website today and sign your child up as soon as possible!

Get them started on the path to financial literacy now and watch them become financial superstars into adulthood as they grow and understand more about the world of money around them!

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