Credit scores issued by the most popular credit-scoring models in the U.S. begin at 300. However, this is unlikely to be your first credit score unless you are irresponsible with your finances. You typically start building credit after you get your first credit product, be it a credit card or a student loan.
Making your payments on time is one way to build your credit score. Depending on how well you utilize your credit, your credit score may get to anywhere from 500 to 700 within the first six months. Going forward, getting to an excellent credit score of over 800 generally takes years since the average age of credit factors into your score.
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What Credit Score Do You Start With?
As someone who’s never taken any form of credit, you, in all likelihood, have no credit score at all. This is because your credit score depends primarily on your payment history and credit utilization. These factors are not established until you obtain your first credit product.
Just how quickly you get your first credit score depends on the credit-scoring model. While calculating a VantageScore score is possible soon after your first credit account appears on the report, getting a FICO credit score requires that the account should be at least six months old. In both cases, the base credit score is 300. However, the starting credit score of most people is typically higher because scores of around 300 are associated with very poor management of credit.
Do You Need Credit to Get a Credit Score?
It’s not necessary for you to get credit to start building your credit history. Some companies, such as Experian, eCredable and LevelCredit, give you the ability to report your qualifying utility, phone, online streaming services and rent payments to credit bureaus:
- Experian Boost helps add eligible bill payments to your Experian credit report.
- eCredable reports eligible bill payments to TransUnion.
- LevelCredit reports rent payments to TransUnion and Equifax and eligible utility and other bill payments to TransUnion.
What Credit Score Does an 18-Year-Old Start With?
Credit scores don’t miraculously appear when people turn 18 years of age. However, this is how old you need to be to apply for your first form of credit. Besides, there is no default credit score. Those over 18 years old get to build their credit in different ways. These include getting student or secured credit cards, becoming authorized users on others’ credit cards, making payments toward student loans while still in college and getting their utility/phone/rent payments to reflect on their credit reports.
By demonstrating good credit habits, 18-year olds may expect their credit scores to get to around 500 within the first six months. However, poor management of credit may result in significantly lower scores.
What Is the Usual Starting Credit Score?
While VantageScore and FICO scores start at 300, it’s unlikely that you’ll start with such a low score. Credit scores at the bottom end of the scale demonstrate serious lapses in how one uses credit, and getting to this stage at the beginning of one’s credit history is highly improbable. Instead, depending on how well you manage your credit, your first credit score might be around the 500 mark.
The age of your oldest form of credit plays a role in your credit score. However, working on other aspects can even get your initial credit score to be around 700. For instance, while making timely payments toward your first credit card helps to improve your credit score, factors such as the amounts you owe, the mix of credit you have and your applications for new credit also play a role.
How Are Credit Scores Calculated?
FICO and VantageScore credit-scoring models rely on data retrieved from credit reports to come up with credit scores. Both assign varying levels of importance to different aspects that go into generating your credit score.
How Long Does It Take to Get a 700 Credit Score?
While getting an excellent credit score cannot happen overnight, it is possible to get a good credit score of around 700 in less than a year, provided you follow the right steps. These include:
- Pay all your bills on time and never miss a payment.
- Reduce your outstanding balances to bring down your credit utilization ratio (the amount you owe compared to your total available credit).
- Don’t apply for or open new credit accounts frequently.
- Don’t apply for different types of credit just to improve your credit score unless you’re sure of making timely payments and keeping your outstanding balances low.
- Go through your credit reports every six months and dispute inaccurate information.
- Keep your oldest credit card account active, as it increases the length of your credit history.
What Is the Perfect Credit Score?
The perfect credit score, either through the FICO or the VantageScore model, is 850. According to a report released by FICO, around 1.6% of people in the U.S. who were scorable had perfect FICO scores (of 850) in April 2019. This number stood at 0.85% in April 2009. Hawaii held the honor of being the state with the highest percentage of people with perfect credit scores on both occasions.
While there is no fixed path to getting a perfect credit score, people who fall under this bracket tend to demonstrate a few similar traits:
- Lengthy credit histories: Most people with perfect credit scores have well-established credit histories. The average age of their oldest accounts stands at 30 years.
- No missed payments: People with perfect credit scores have no mention of missed payments, collections activity or any other type of negative information in their credit reports.
- Low credit utilization ratio: FICO suggests that people with perfect credit scores maintain an average credit balance of around $13,000, which does not include mortgage balances. However, their average credit utilization ratio stands at just 4.1%.
- Minimal inquiries for credit: Those with credit scores of 850 tend to get new credit once in a while, but not too often. The FICO report suggests that while around 10% of people from this bracket had at least one inquiry in the preceding year, around 25% of them had opened at least one new credit account during the same period.
Quick Tip: Many people wrongly assume that carrying a balance on their credit cards and paying interest helps their credit score. This is untrue. Make it a goal to pay off your credit cards in full each month to avoid paying interest. –Lee Huffman, credit card expert at BaldThoughts.com
Other Questions You May Have About Credit Scores
Credit scores can seem confusing, especially for those who have no credit or are just starting to build credit. Looking through answers to other commonly asked questions about what credit score you start with and what you can do to improve it going forward can help.
1. What is the credit score of someone with no credit?
Someone with no credit typically has no credit score. There might be an exception if you get your bill/rent payments to reflect on your credit reports or if you’ve been a victim of identity theft.
2. What’s the average credit score for a 20-year-old?
The average credit score of those between 18 to 23 years of age was 674 in 2020 and 667 in the preceding year. In both years, this average was the lowest of all age groups.
3. Is no credit worse than bad credit?
Any credit score from 670 to 739 is considered good. Very good to exceptional credit scores range from 740 to 850.
4. What credit score is needed to buy a house?
The credit score you need to qualify for a mortgage depends on the type of mortgage you’re after and the lender in question. While it is possible to get a mortgage with fair/average or no credit history, you stand to get the best terms if you have good to excellent credit.
For conventional loans, you would need a credit score of 620 or higher. You might qualify for a Federal Housing Administration (FHA) loan if your credit score is 500 or higher. The minimum credit score required to apply for a United States Department of Agriculture (USDA) loan is 580, although lower scores might qualify in some scenarios. While Veterans Affairs (VA) loans come with no minimum credit score requirements, it is common for providers of such loans to look for scores of 620 or higher.
5. What is a decent credit score to buy a car?
Car loan providers follow no set standards surrounding minimum credit score requirements. While some lenders might look at your FICO or VantageScore scores, others might check your FICO Auto Score. In any case, your credit score plays an important role in the interest rate assigned to your auto loan and the size of down payment required. In the second quarter of 2020, the average interest rate on car loans for those who had super-prime credit (781 to 850) stood at 3.24%. At the other end of the spectrum, those with deep subprime credit (300 to 500) received an average interest rate of 13.97% on their car loans.
6. Does your credit score start at zero?
Your credit score does not start at zero. Having no credit score is not the same as having a zero credit score. While the starting point of VantageScore and FICO credit scores is 300, starting this low is unlikely unless you demonstrate very poor credit management skills.
7. How do credit score and credit limit relate?
Lenders view your credit score as a measure to gauge the risk you pose as a borrower. If a lender looks at you as someone with minimal risk, it might be willing to offer you a higher credit limit than it would have if you had less-than-perfect credit. You might qualify for a higher credit limit than someone with the same income if you have a better and longer credit history that results in a higher credit score.
Your credit limit, on the other hand, may have an effect on your credit score through your credit utilization ratio. This refers to the amount you’ve borrowed from your total available credit and should ideally be 30% or lower. If you have a total available credit limit of $10,000 through different credit products and have borrowed $5,000 so far, your current credit utilization ratio stands at 50%, which is significantly higher than the desired limit.
Now that you know what your credit score is when you first start, consider taking steps to build your credit in the near future. If you’re unable to qualify for a regular or a student credit card, applying for a secured card might serve as an effective alternative. You may also start building your credit by getting your bill and rent payments to reflect on your credit reports.
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