By: Edward J. Leach, CFP®, MBA, CEPA®
As more of our clients send children off to college, a common question has come up:
"How can we help them start building credit responsibly?"
Many students today use debit cards linked to a parent's account, which is fine for managing spending, but it doesn't build a credit history. Establishing good credit early can help your child rent an apartment, buy a car, or even qualify for more favorable insurance rates in the future.
Here are three practical ways to help your child build credit safely and smartly.
1) Add Them as an Authorized User
One of the easiest ways to begin is to add your child as an authorized user on your existing credit card.
It allows them to "piggyback" on your positive payment history.
Most major credit card issuers will report payment history to the credit bureaus, helping your child establish a credit file.
Ensure the account is in good standing — consistent on-time payments and low balances are key.
You can also set clear limits on how and when they use the card, ensuring it remains a learning experience rather than an open line of credit.
2) Help Them Open Their Own Starter Account
Once your child turns 18 and has some income (even from a part-time or summer job), they can apply for a student credit card or a secured credit card.
These cards often start with a small credit limit — typically $500 to $1,000 — and help them learn how to borrow and repay responsibly.
If you set up their own starter card, encourage your child to:
Use the card for small, predictable purchases (like gas or groceries).
Set up auto-pay in full each month to avoid late fees and interest.
Keep balances under 30% of their limit to build a strong credit score over time.
3) Make Financial Education Part of the Process
The most valuable credit tool your child can have isn't a card — it's understanding how credit works.
Take time to talk about the basics:
What a credit score measures.
How payment history matters.
Why managing debt wisely opens doors later in life.
Turn it into an ongoing conversation — review statements together, celebrate responsible use, and encourage curiosity about money.
At Highland, we believe financial literacy is the foundation for long-term independence. That's why our team regularly hosts financial literacy sessions for high school and college students, covering topics like budgeting, saving, and using credit responsibly. If your child or a student you know would benefit from one of these sessions, please don't hesitate to contact our team.
Ed Leach, CFP®, MBA, is a Partner and Wealth Advisor at HIGHLAND Financial Advisors, LLC in Wayne, NJ, and works directly with clients advising them on their financial planning and investments. Ed’s work focuses on the unique needs of business owners, helping them extract value from their businesses while creating efficiencies in their business and personal financial plans. He is also a member of NAPFA, which is dedicated to serving fee-only advisors.
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The above article was written with the assistance of artificial intelligence (AI).