Your teen's credit history will have a lasting impact on their adulthood. Good credit opens doors to affordable homeownership, while poor credit can create financial obstacles for years to come. Building credit, however, can be a challenging "chicken-and-egg" situation. Your teen needs credit to build credit, but they struggle to prove their responsibility without an opportunity.

At WyHy, we believe in equipping teens with financial knowledge and helping them build healthy credit habits. Start the conversation early and guide them on the path to becoming financially savvy adults. Here are four essential tips to share:

1. Discuss the importance of income: Help your teen understand that income plays a vital role in qualifying for credit. Even part-time work can demonstrate a pattern of responsibility to credit card companies.
2. Foster hands-on banking experiences: Have your teen open a WyHy Independence Checking account (or help them open a WyHy Savings account if they are not yet in high school), allowing them to learn responsible banking practices. Teach them the differences between debit and credit cards, emphasizing that credit cards involve borrowing money and paying interest if not paid in full by the due date. Encourage budgeting to instill long-term financial health.
3. Cultivate responsible habits: Whether your teen has their own card or is using yours, emphasize the importance of responsible credit card usage. Encourage them to pay their bills on time every month, as payment history is a significant factor in determining credit scores. Teach them to avoid charging more than they can afford to pay and to treat their credit card like a debit card. Paying off the entire balance each month is wise.
4. Develop credit score awareness: Explain the role of credit scores and reports. Inform your teen that debt is reported to credit rating bureaus, which track credit history. Once they have established credit, encourage them to check their credit reports to ensure accuracy. The three main credit reporting companies offer free reports every 12 months. Credit bureaus utilize scoring models such as the common FICO score, ranging from 300 (very poor) to 850 (exceptional). Higher scores instill confidence in creditors regarding their ability to repay debts.

Now is the time to provide your teen with the tools they need to succeed. By imparting financial knowledge and instilling responsibility, you set them up for a lifetime of benefits. With WyHy Credit Union, we're here to support your teen's credit journey and ensure their good credit takes good care of them.