Jan 29, 2023

Question of the Day: Can you name ONE of the ways that consumers, under age 25, establish credit?

Answer:

Here's a look at credit-building tools, and how to use them to earn a good credit score.

1. Get a secured card

2. Get a secured loan

3. Use a co-signer

4. Become an authorized user

5. Get credit for the bills you pay

6. Practice good credit habits

Questions:

  • Do you think it's a good idea to try and establish credit when you are young? Why or why not? 
  • Why do you think that credit cards tend to be the entry point for establishing credit for so many consumers? 
  • How do you think that you will establish credit? 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (NerdWallet):

"Building credit can be tricky. If you don’t have a credit history, it’s hard to get a loan, a credit card, or even an apartment.

But how are you supposed to show a history of responsible repayment if no one will give you credit in the first place?

Several tools can help you establish a credit history:

  • If your aim is to get a credit card, you could start with a secured credit card or co-signed card, or ask to be an authorized user on another person’s card.

  • If you want to build credit without a credit card, you might try a credit-builder loan, secured loan, or co-signed loan. There are also ways to use rent, phone, and utility payments to build credit. Some of these ways are free, others carry a fee."

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Find out the dangers of predatory lending by having your students play the NGPF Arcade game, Shady Sam. 

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What's leading Gen Z to take on credit card debt? Find out in this FinCap Friday: Gen Z Credit Frenzy.

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About the Author

Mason Butts

After graduating from UCLA with a Master's in Education, Mason spent 5 years as a science educator in a South Los Angeles public high school. He is committed to supporting the holistic growth of all students and empowering them to live a life of relational, academic, and financial success. Now settled in the Bay Area, Mason enjoys facilitating professional developments and partnering with educators as they prepare students for a bright financial future. When Mason is not building curriculum or planning a training, he can be found cycling, trying new foods, and exploring the outdoors.

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