What is a recommended first step for a young adult to start building a credit history?

Becoming an authorized user on a parent's credit card is a practical and effective first step for a young adult to start building a credit history. This approach allows the young adult to benefit from the credit card account's history, as the primary cardholder's activity is reported to credit bureaus. Positive payment history and responsible credit utilization on the parent's card can improve the young adult's credit score, which is essential for future financial endeavors such as applying for loans, renting apartments, or obtaining lower interest rates.

Opening a bank account, while beneficial for managing finances, does not contribute to credit history since bank account activity is not reported to credit bureaus. Taking a personal finance course, although valuable for gaining knowledge about managing money, doesn't directly impact credit history. Saving a large sum of money may prepare a young adult for future purchases but does not establish creditworthiness. Engaging with credit through an authorized user status effectively lays the groundwork for a strong credit history.