Whether you are a young adult with only a little credit history or you have had years of credit experience, you may be curious what does your credit score start at? At some point in our lives, we have no credit score at all. But knowing when that changes and what your initial score is, may help you understand where you stand and how your score builds through the years.
What is a Credit Score?
Simply put, a credit score is a number that demonstrates how likely you are to be financially responsible. There are three major credit agencies, Equifax, Experian, and Transunion, that collect information about you. Specifically, these credit bureaus know about your loans and credit card activity and create a report that shows your history and payments. From these reports, a score can be calculated that generally range from 300-850. While there are many scoring algorithms, most lenders will consider your FICO score. If you have a score above 740, you will have better access to loans and better interest rates.
When Will I Have One?
When you turn 18, you become eligible to apply for credit. However, you don’t instantly have a credit report and credit score. It’s a common misconception that at this age you instantly have credit. It will take some time to establish and then more time to build.
You will have a credit score only once you have enough credit history to generate a score. Many times this can take about 6 months of credit history. A mortgage, auto loan, credit card, student loan, or a personal loan all will initiate your credit history. Keep in mind your credit score is based off your credit report from a credit agency. If the reporting agencies have not yet created a reporting file for you, you will not have a score.
Rest assured, you will never have a score of zero. Because you won’t have a score until you have some credit history, your score will be at least 300 to start. And most likely it will be more around 500 depending on your credit activity and payments. As you live your life and apply for, use, and pay off debt, your score will build.
What Actions Can I Take to Establish A Good Score?
- Understand how credit works and learn what is important.
- If you have a friend or family member who is willing to add you as an authorized user on their credit card, you can benefit from their credit card activity to build your credit.
- Credit cards are one of the best options to build credit. Consider a secured credit card.
- Get a loan. Consider a credit builder loan or others to build your credit.
- Make your payments on time. This is THE most important thing for good credit.
How Can I Access My Credit Score?
It is good practice to regularly check your free credit reports from all three credit bureaus each year. You also should also check your credit scores regularly. You’ll want to check your credit card, bank or loan statements as sometimes your score is included. If not, you can consider signing up and purchasing your score through a credit score service.
Understanding your initial credit score is a great way to set a habit for good financial wellbeing. A great score does take time. Be patient and as you take out more loans and make regular on-time payments, your score will grow.