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How Gen Z Can Build Credit
Posted by: Ameris Bank
August 26, 2024
If you're a Gen-Zer, defined by The Pew Research Center as those born between 1997 and 2012,1 it is essential to establish your credit history at a young age. Your credit score will become the cornerstone of your borrowing power throughout your adult life, and good credit makes you a trustworthy borrower and helps you qualify for auto, personal, college, and home loans with favorable interest rates and terms.
Building credit takes time and effort and doesn't happen overnight, but there are basic steps you can take. This Ameris Bank blog article features tips on how Gen Z consumers can build credit and positively impact their financial future.
Generation Z (Gen Z) comprises over 69.3 million people and makes up roughly one-fifth of the U.S. population.2 Many Gen Z individuals are in the initial phases of establishing their credit history or are considered credit invisible, meaning they do not have a personal credit record.
Various factors can lead to a Gen-Zer being credit invisible. These include limited or no credit history, use of alternative financial services not reported to credit bureaus, or not being an authorized user on a family member's or significant other's account. The good news? You can establish a credit score in about six months with regular credit activity and consistently paying bills on time.
One way to start building your credit is by using a credit card. This demonstrates your ability to manage credit and make on-time payments, which are essential factors in creating a positive credit history. It's important to use your credit card responsibly by keeping your balances low and making payments on time. Below are some options for various Gen Z age groups.
UNDER THE AGE OF 18
If you are under age 18, you can't get your own credit card, but you can become an authorized user on a family member's or significant other's credit card. This means you can use their credit card as your own, which can be a helpful way to build credit so long as the primary cardholder has a good credit history.
AGES 18-20
If you're 18 or older, consider applying for a credit card in your own name. Remember that if you're under 21, you'll need a co-signer who is at least 21 years old, or you'll have to prove that you have enough income to cover your minimum credit card payments, according to the Consumer Financial Protection Bureau (CFPB).3 Two popular types of credit cards among people aged 18 to 20 are secured and student credit cards.
Secured cards require a cash deposit as collateral, making them easier to obtain and an excellent starting point for credit beginners. Student cards are designed for college students and often provide rewards and benefits. Ameris Bank, for example, offers a College Real Rewards Card that lets students redeem their points for cash back, travel, merchandise, or gift cards.
AGES 21 AND UP
If you are aged 21 or up, you can apply for a traditional credit card, which isn't linked to any collateral. Getting approved for a traditional card can be difficult, especially if you don't have enough credit history. That said, you might be able to get a card with a low credit limit if you have an established banking history and a checking account that has not been overdrawn.
Because of their young age, many members of Generation Z may be navigating personal finance for the first time and might have less experience managing and paying bills. If this describes you, don't worry one bit! You can improve your financial health and credit score with some planning and effort.
Start by creating a monthly budget that prioritizes your financial obligations and treats your bill payments as non-negotiable expenses. This helps ensure you have enough funds to cover all your costs. Next, consider setting up automatic payments for recurring bills to ensure you never miss one. These simple steps can safeguard your credit score, keep you in good standing with your creditors, and give you peace of mind.
Financial experts and credit bureaus commonly agree that a 30% or lower credit utilization ratio is a good goal. Keeping your credit card balances below 30% of your credit limit sends lenders a clear message that you're a responsible borrower. Plus, staying at or below this threshold shows your ability to manage credit wisely and not exceed your spending limit.
By realizing the significance and impact of your credit score, you can take proactive steps to improve it. These include making monthly payments on or before their due date, keeping credit card balances low, and monitoring your credit report for errors and inconsistencies.
Lastly, resist the temptation to apply for too much credit at once. Each application can result in a hard inquiry on your credit report, potentially lowering your score. By avoiding these common mistakes, you can build a solid credit foundation that will serve you well throughout your Gen Z years and beyond.
Building credit and achieving a good credit score takes time, but starting early gives you a significant advantage. Focus on responsible credit use, such as keeping credit card balances low and not missing payments. Don't be discouraged if your score isn't perfect right away—consistency is key.
Reviewed April 2025
Sources:
1 https://www.pewresearch.org/short-reads/2019/01/17/where-millennials-end-and-generation-z-begins/
2 https://www.statista.com/topics/10522/generation-z-in-the-united-states/
3 https://www.consumerfinance.gov/rules-policy/regulations/1026/51/
4 https://www.experian.com/blogs/ask-experian/research/gen-z-and-credit/
Ameris Bank is not affiliated with nor endorses Pew Research Center, Statistica, FICO®, the Consumer Financial Protection Bureau (CFPB), or Experian®. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Information presented in Ameris Advice is provided for educational purposes only and is not related to Ameris Bank's actual products or services. Ameris Bank makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Ameris Bank recommends you consult a professional for any specific guidance you are seeking.
Building credit takes time and effort and doesn't happen overnight, but there are basic steps you can take. This Ameris Bank blog article features tips on how Gen Z consumers can build credit and positively impact their financial future.
MANY GEN Z CONSUMERS LACK CREDIT PROFILES
Generation Z (Gen Z) comprises over 69.3 million people and makes up roughly one-fifth of the U.S. population.2 Many Gen Z individuals are in the initial phases of establishing their credit history or are considered credit invisible, meaning they do not have a personal credit record.Various factors can lead to a Gen-Zer being credit invisible. These include limited or no credit history, use of alternative financial services not reported to credit bureaus, or not being an authorized user on a family member's or significant other's account. The good news? You can establish a credit score in about six months with regular credit activity and consistently paying bills on time.
TIP #1: START BUILDING CREDIT EARLY WITH A CREDIT CARD
One way to start building your credit is by using a credit card. This demonstrates your ability to manage credit and make on-time payments, which are essential factors in creating a positive credit history. It's important to use your credit card responsibly by keeping your balances low and making payments on time. Below are some options for various Gen Z age groups.UNDER THE AGE OF 18
If you are under age 18, you can't get your own credit card, but you can become an authorized user on a family member's or significant other's credit card. This means you can use their credit card as your own, which can be a helpful way to build credit so long as the primary cardholder has a good credit history.
AGES 18-20
If you're 18 or older, consider applying for a credit card in your own name. Remember that if you're under 21, you'll need a co-signer who is at least 21 years old, or you'll have to prove that you have enough income to cover your minimum credit card payments, according to the Consumer Financial Protection Bureau (CFPB).3 Two popular types of credit cards among people aged 18 to 20 are secured and student credit cards.
Secured cards require a cash deposit as collateral, making them easier to obtain and an excellent starting point for credit beginners. Student cards are designed for college students and often provide rewards and benefits. Ameris Bank, for example, offers a College Real Rewards Card that lets students redeem their points for cash back, travel, merchandise, or gift cards.
AGES 21 AND UP
If you are aged 21 or up, you can apply for a traditional credit card, which isn't linked to any collateral. Getting approved for a traditional card can be difficult, especially if you don't have enough credit history. That said, you might be able to get a card with a low credit limit if you have an established banking history and a checking account that has not been overdrawn.
TIP #2: Pay Your Bills on Time
Because of their young age, many members of Generation Z may be navigating personal finance for the first time and might have less experience managing and paying bills. If this describes you, don't worry one bit! You can improve your financial health and credit score with some planning and effort.Start by creating a monthly budget that prioritizes your financial obligations and treats your bill payments as non-negotiable expenses. This helps ensure you have enough funds to cover all your costs. Next, consider setting up automatic payments for recurring bills to ensure you never miss one. These simple steps can safeguard your credit score, keep you in good standing with your creditors, and give you peace of mind.
TIP #3: Keep Your Credit Utilization Low
Gen Zers have many ongoing financial commitments, and, like the generations before them, they value allocating a portion of their earnings towards entertainment, shopping, dining out, and travel. When using a credit card for necessary expenses and experiential spending, it is essential to maintain a low credit utilization ratio. Credit utilization is the amount (in a percentage) of your credit used from the total available credit. For example, if you have a $1,200 balance on a card with a $7,500 limit, your credit utilization amount is 16% ($1,200 credit card balance divided by the $7,500 credit card limit).Financial experts and credit bureaus commonly agree that a 30% or lower credit utilization ratio is a good goal. Keeping your credit card balances below 30% of your credit limit sends lenders a clear message that you're a responsible borrower. Plus, staying at or below this threshold shows your ability to manage credit wisely and not exceed your spending limit.
TIP #4: Realize the Impact Your Credit Score Has
Your credit score isn't just a number—it's a powerful tool that can shape your financial future during your Gen Z years. A good credit score can help you secure a loan, rent an apartment, obtain automotive insurance, or even land a dream job. Your credit score will also influence the interest rate and borrowing limit you receive.By realizing the significance and impact of your credit score, you can take proactive steps to improve it. These include making monthly payments on or before their due date, keeping credit card balances low, and monitoring your credit report for errors and inconsistencies.
TIP #5: Avoid Common Credit Pitfalls
As a Gen Z consumer entering the world of credit, it's crucial to avoid common pitfalls that can damage your financial future and credit profile. Overspending is an easy trap to fall into, but remember that a credit card isn't free money. Create a budget, stick to it, and make your credit card payments on time. Next, it's best to avoid maxing out your credit card. When you reach the limit on your card, you will have to make larger minimum payments and pay more interest each month. Over time, paying down your credit card can become challenging and result in increased debt.Lastly, resist the temptation to apply for too much credit at once. Each application can result in a hard inquiry on your credit report, potentially lowering your score. By avoiding these common mistakes, you can build a solid credit foundation that will serve you well throughout your Gen Z years and beyond.
WHAT IS A GOOD CREDIT SCORE FOR GEN Z?
In June 2024, Experian® revealed that young adults in Gen Z are demonstrating positive financial habits by steadily improving their credit scores and increasing their credit balances. According to the report, the average FICO® Score for Gen Z individuals stands at an impressive 680.4 Achieving a FICO® Score of 680 or higher is particularly noteworthy, as it signifies a "good" credit rating, enhancing access to better loan terms and lower interest rates and paving the way for broader financial opportunities.Building credit and achieving a good credit score takes time, but starting early gives you a significant advantage. Focus on responsible credit use, such as keeping credit card balances low and not missing payments. Don't be discouraged if your score isn't perfect right away—consistency is key.
Reviewed April 2025
Sources:
1 https://www.pewresearch.org/short-reads/2019/01/17/where-millennials-end-and-generation-z-begins/
2 https://www.statista.com/topics/10522/generation-z-in-the-united-states/
3 https://www.consumerfinance.gov/rules-policy/regulations/1026/51/
4 https://www.experian.com/blogs/ask-experian/research/gen-z-and-credit/
Ameris Bank is not affiliated with nor endorses Pew Research Center, Statistica, FICO®, the Consumer Financial Protection Bureau (CFPB), or Experian®. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Information presented in Ameris Advice is provided for educational purposes only and is not related to Ameris Bank's actual products or services. Ameris Bank makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Ameris Bank recommends you consult a professional for any specific guidance you are seeking.