It can be difficult for young people to understand the importance of building up your Credit. When they are graduating high school and looking at colleges or trying to figure out how they are going to fit into workforce, they are probably not ready to think about purchasing a home or a getting a car loan. But these milestones are down the road for everyone and one day your teenager will need to think about their credit score and what it means.

But this doesn’t mean that banks and credit cards won’t start targeting your children on their 18th birthday. America’s favorite past time for the past few decades has been running up credit card debt, and they want everyone to get started as early as possible. This is in spite of the fact that many 18 year olds don’t have a steady income source and they can easily find themselves with more debt than they can realistically pay off each month. Expenses like gas, car insurance, and entertainment can add up quickly. One quick emergency (a car accident or just a major repair) can quickly lead to a debt situation that can spiral your credit quickly.

The advice that we have given our kids as they approach this age is to start carefully, but not to be afraid of credit. We recommend they open a single card with a low credit limit, and make sure to pay the card off every single month. If a large expense comes up, they should have an emergency fund to help cover this. Planning to use your credit card *as* your emergency fund is a plan that will almost always lead to trouble.

A good rule of thumb is to never sign up for a credit card on a whim. Some stores will offer you 15% off your purchase TODAY if you sign up for their card, or your favorite baseball team might offer you a sweet throw blanket if you only sign up today. Instead, choose a card with a good rate (although this will never apply to you if you pay off the card each month), that is one that you will use often. I like to recommend gas cards, because they often give you a few cents off each gallon of gas that you purchase, and the amount that you charge will typically be the same each month.

I encourage young people also to use sites like creditsesame.com to check their credit for anything out of the ordinary. Since they are limiting the amount of credit that they open, any irregularities in credit should be quickly noticeable. These sites are a great way to protect yourself from identity theft, to make sure that nobody else is opening any credit in your name. But they also can be a good way to check our current credit scores, to see when (down the road) you are ready to apply for a loan to purchase that first home or vehicle.

Over time, your credit will start to build and your good credit score will make sure that you get the best rates possible.