Credit is a tool that needs practice to perfect, especially with teenagers. But it’s important to expose them to credit young so they know how to use it effectively when they get older. If you find yourself in this situation, here’s how to go about it step by step:

Start with the “learner’s permit” version of a credit card, otherwise known as a pre-paid card. This gives them the experience of spending on a card without the risk to their credit. Next, open a checking account with a debit card attached.

When it’s finally time for them to use an actual credit card, make them an authorized user on your card. This can be done before they turn 18. It may even help their credit if yours is good to begin with. But don’t forget, you are fully responsible for any charges they incur.

After they turn 18, they are eligible to apply for their own card. You may co-sign with them or become a joint applicant if needed. Keep in mind, if they pay late, your credit will suffer. Another option for them if they don’t qualify for a credit card they desire is a secured credit card where you make a security deposit and borrow against it.

Once their credit starts accumulating, make sure you teach them how to check their own credit with their free annual credit report.

Bottom line, helping your teens build their credit is a great idea. Just make sure you are smart about how you do it, so your credit is not put at risk unnecessarily.