For children, financial decision-making involves little more than saving and selecting items to buy with babysitting money and cash earned mowing lawns.

If only personal financial management remained this simple over the course of a lifetime! The fact is, money matters become more complex as you age and enter into credit agreements and other long term financial commitments.

When it comes to credit, young people have a significant advantage over their older counterparts – yet it can work against them. On one hand, emerging adults have not yet had time to do grave damage to their credit ratings.

But at the same time, many have not been able to build much of a positive credit presence, either. Successful young money managers find balance, using early credit interactions to establish themselves in the lending and credit markets.

Establishing credit – everyone starts somewhere

Establishing credit references takes time. As a result, it is important for young people to take advantage of every available credit building opportunity. This can be easier said than done for those without many credit interactions, but there are a few ways to make the right impression – even with just a few positive references.

Prepaid credit cards – This reloadable form of credit can take the place of a bank account. It is also a good way to build credit. Managing a revolving balance on a prepaid card is similar to the way other cards are used, so success with prepaid credit cards serves as a foundation for future credit interactions.

Not only do prepaid cards furnish an opportunity to build positive credit references, but the cards can also be used as budgeting tools, helping young users nurture spending discipline and financial accountability.

Car loan or lease – Car contracts are good credit-builders, because auto loans and leases show a borrower’s ability to repay installments, over time. The low-interest loans are made available to young people without extensive credit histories (to sell more cars), so successfully repaying a car loan lays the groundwork for future loan approvals.

Mobile phone and utility contracts – Credit reporting agencies maintain records about your payment history, so it is important to stay current with credit accounts – at all times. Though mobile phone contracts and utility accounts are not conventional loans, they represent credit commitments, which can be used to your advantage.

On the other hand, failure to make timely payments will hurt your credit score. In fact, if your credit history is suspect, phone companies and utility providers may require a deposit, before opening service.

Protecting your credit rating – don’t let it slip away

Preserving your positive credit rating opens doors to future financing – funding you’ll need years from now. With so much invested in establishing a good credit score, losing it to financial missteps is not an option. Use these tips to stay on track:

Pay on time, every time – Timely payments are the building blocks of a good credit rating, so it cannot be overemphasized: Always pay on time! Even when a credit card company, mortgage holder, or other creditor extends a grace period; bills have due dates.

The only way to protect your credit score is submitting payments within the terms of your credit agreement. Creditors may not report a late payment the first time you lag, but delinquency eventually catches-up to diminish your credit score

Know your credit status – Credit reporting agencies are continually at-work collecting data about your spending habits, repayment history, and success managing various forms of credit. Unfortunately, mistakes can happen, leaving you with a damaged credit rating.

Fraud and identity theft, for example, quickly undermine the financial reputation you’ve built for years, leaving the wrong impression with creditors. To reduce vulnerability, check your credit score periodically, using a free annual report or paid service.

Expanding credit opportunities

An individual’s financial life unfolds over the course of many years, so moves made today have an impact on tomorrow’s outcomes. In order to fully participate in lending and credit markets – and enjoy access to financing, it is essential to maintain a consistent track record, repaying loans and satisfying various forms of credit.

Diversity boosts credit score – Credit agencies use complex metrics to evaluate individual credit performance – ultimately assigning a number or “score”. Applicants with the highest credit scores not only have the best chance of getting approved for financing, but they also enjoy the best available interest rates and terms. A credit history reflecting success managing various forms of credit – installment loans, revolving accounts, etc., leads to a high credit score.

Patience promotes financial stability – Though it takes many years to build and protect a positive credit rating, delinquency and default quickly damage a good score. Each successful credit interaction supports personal financial health – time is a key ingredient, building wealth and security. In the face of temporary setbacks, patience points to positive long-term outcomes, even when short-term prospects appear bleak.

Time is on the side of young people participating in the credit and financial systems. A strong credit rating doesn’t set-in overnight, however, so building a solid history starts at a young age. With patience and discipline, committed young money managers eventually earn creditworthiness, giving them lifelong access to mortgages, loans, and other important forms of credit.