Building credit is one of the most important financial steps a young adult can take. But getting started isn’t always easy, especially when there’s little or no payment history to show lenders.
To shed light on this challenge, we sat down with John Simpson, CEO of RentReporters. Drawing on both his own parenting experience and years of helping renters nationwide, John shared practical lessons for building strong, lasting credit habits.
1. Start Early and Model Good Habits
The teenage years are often the right time to introduce credit education. One simple step is adding a child as an authorized user. It doesn’t mean handing over a free-spending card; it’s a way to start conversations about financial habits.
“Credit is really the building block of financial life,” John explains. “Adding them early is a great opportunity to talk about budgeting and responsibility.”
Parents should also remember that their own credit behavior directly affects their kids. An authorized user’s history mirrors the primary cardholder’s. Paying on time and keeping balances low can set children up for success, while high utilization or missed payments can drag them down.
John was reminded of this when his college-aged daughter texted him about her score dipping because his card usage was too high. “She was giving me grief for ‘ruining her credit,'” he laughs. “But it showed me she understands how the system works — and that was the point.”
2. How to Offset the Impact
The first lesson John instilled in his kids was simple and non-negotiable: never carry a balance.
“Credit cards are not free money. They are just a convenience in your wallet,” he says. “The first thing I taught my kids was to set up automatic payments so the balance is paid in full every month. That was not optional.”
Boundaries are equally important. John suggests limiting use to family expenses like groceries, gas, or school supplies. “It is not about being an unlimited bank account for them,” John says. “It’s about helping them build financial IQ.”
For parents who want oversight, most card issuers now offer real-time purchase alerts, making it easy to stay informed without hovering over every transaction.
3. Encourage Independence at the Right Time
Eventually, kids will be ready to manage their own credit. There’s no fixed timeline for removing them as an authorized user. Length of history helps, but independence matters more.
“When your kid says, ‘I am ready to do this on my own,’ that is a fantastic transition,” John says. “It means they are ready to take ownership of their financial journey.”
That’s the time to help them apply for their first credit card, whether it’s a secured card, student card, or a low-limit traditional card.
4. Why Rent Reporting Matters
Credit-building doesn’t stop with credit cards. John points to a major industry shift — with VantageScore 4.0 now approved for mortgage underwriting, on-time rent payments can finally help borrowers qualify for a home loan.
“For years, renters were left out of the system. Now rent counts towards mortgages, and that is life-changing,” John said.
For the millions of renters who pay on time every month but see no benefit on their credit reports, reporting rent adds a positive tradeline without taking on new debt. That can make the difference between being denied and being approved for a mortgage.
Key Takeaways
- Start early: Use authorized user status to begin the credit conversation.
- Model good habits: Pay on time and keep balances low.
- Set boundaries: Teach discipline by limiting spending categories.
- Celebrate independence: Guide kids toward their own cards when ready.
- Leverage rent reporting: Turn monthly rent into a credit-building tool
Already paying rent? Make it count. RentReporters will help you add your rent to your credit report so you can build the payment history lenders want to see.
Check out the full podcast with John HERE!
