03/25/2025
A Dad's Guide to Building Credit: How NOT to Go Broke Before 25
Some questions posed to me by my daughter recently concerning a larger purchase she was considering making, made me realize it was time to have a serious talk—not about birds and bees (I fumbled through that one already), but about something equally terrifying: credit.
Yes, I know. You’d rather listen to me talk about how back in my day, we had to actually call people to order pizza. But trust me, learning to building credit is one of those grown-up things you’ll thank me for later—like teaching you to change a tire or that yes, you do need car insurance.
So, here’s how you can build credit responsibly without ending up calling me when your bank account hits zero and your car payment is due.
1. Get a Credit Card—But Treat It Like an Untamed Tiger
It's exciting to add that card next to your debit card, but handle with caution. A credit card IN NOT free money; it’s a short-term and at your age, an expensive loan. Use it for small things, like gas or groceries. Don't charge what you can't pay off at the end of the month. If you start swiping it for things like a 100-inch TV, remember: your future self will be eating ramen for months. Always keep that balance under 30% of your credit limit.
2. Become an Authorized User—aka, Ride My Credit Coattails
If you’re not ready for your own card, I might.....Maybe.... let you piggyback on mine as an authorized user—but that means no funny business. I’ll see every charge you make, so if I find an alarming purchase at a llama farm, you better have a good explanation. Fun Fact - There isn't a good explanation for any purchase at a llama farm.
3. Pay Your Bills on Time—Like, Every. Single. Time.
Credit scores don’t forgive or forget. One late payment can haunt you like that embarrassing video of you I keep on my phone for special occasions. Set up reminders on your phone that a payment is coming due, so you don’t have to rely on your “I’ll do it later” memory. BTW, your clothes still need picked up.
4. Keep Your Credit Utilization Low—aka, Don’t Max It Out
If your credit limit is $1,000, don’t spend $999 on concert tickets and cute outfits for the dog. Try to use less than 30% of your limit. Credit bureaus prefer responsible spending, not impulse buys that make your bank account (and me) cry.
5. Don’t Apply for every Credit Card Offer that comes in the Mail - Even if the Picture on the Card is a Cute Puppy.
Every time you apply for a new credit card, it dings your credit score a little. So, don’t sign up for every “free T-shirt” credit card offer at the mall. You’ll regret it when your score takes a hit, and you have 17 identical, low-quality shirts - laying on your floor.
6. Check Your Credit Report—Because Mistakes Happen
Once a year, check your credit report. There are numerous sites that let you check your report for free once a year. Look for mistakes—like a mysterious line of credit somewhere you've never shopped on your own, like the hardware store. We all know you only walked through those doors with Dad making you tag along.
7. Consider a Credit-Builder Loan—Like Training Wheels for Your Credit Score
Some banks offer credit-builder loans, where you “borrow” money and make payments into a savings account. It’s basically a way to prove to the bank that you can handle money—without them risking you buying a llama at the llama farm.
Final Dad Wisdom
Credit is like a good reputation: easy to ruin, hard to rebuild. Use it wisely, and your future self will thank you. Mess it up, and, well… let’s just say my couch isn’t as comfortable as your bed.
Now go forth, spend responsibly, and for the love of all that is good—pay your bills on time and pick up your clothes!
The Dad - Troy Funk - Biz Dev
Midwest Fidelity Services, LLC
