What Credit Score Do You Start With?

Key Takeaways

• Your credit score doesn’t start at a specific number.
• You don’t have a credit score until sometime after you have a credit account on your credit report.
• Factors like payment history, balances and length of credit history determine your credit score.
• You can build your initial credit history with a credit card, student loan, car loan or other types of credit accounts.

What Does Your Credit Score Start At?

While 18 is generally the youngest age you can have a credit card and start building your credit score, there isn’t a starting credit score that everyone is assigned on their 18^th birthday.

You don’t start at 0 (which isn’t a credit score) or 300 (the lowest credit score in both major credit scoring models).

And while the 18-26 age range, which is when many start to build their credit history, has an average credit score of 680, that doesn’t actually reveal a starting credit score.

That’s because you simply don’t have a credit score until you establish some credit accounts.

Having no credit history is sometimes also called being credit invisible or ‘unscoreable,’ and while that status comes with some limitations, you generally have more options with no credit score than with bad credit.

When Does Your Credit Score Start?

You start building your credit report once you open your first line of credit, which could be a credit card, student loan or another credit product.

But you don’t immediately get a credit score once you’re approved or even after receiving your first statement.

First, the account will have to appear on one of your credit reports from the three major credit bureaus, which can take between 30 and 60 days from the date it was opened.

Then, credit scoring companies like FICO need to have enough information to generate a score.

In FICO’s case, you must meet two criteria:

• One or more credit accounts opened for at least six months
• One or more credit accounts reported to a major credit bureau within the past six months

So, when starting from scratch it would take at least six months from your first credit account being open to have a FICO credit score.

How Is Your Credit Score Calculated?

Credit scoring companies like FICO and VantageScore use a variety of factors to calculate your credit score from information on your credit report. Some factors have a bigger impact on your credit score than others.

For instance, FICO considers these:

• Payment history (35% of your score)
• Credit balances (30%)
• Length of credit history (15%)
• New credit (10%)
• Mix of credit accounts (10%)

While each scoring company weighs each factor differently, the factors themselves are similar and boil down to good financial habits like using credit responsibly and making payments on time.

Is It Possible To Have a Credit Score Without a Credit Card?

We’ve established that to have a credit score, you need to have some kind of credit. But it doesn’t necessarily have to be a revolving credit account like a credit card.

Installment credit accounts, like a car loan or student loan, will appear on your credit report and eventually contribute to your credit score as you repay them. In fact, it’s good to have both installment and revolving accounts in your credit mix.

There’s also a product called a credit-builder loan, which allows you to build up credit history by depositing a loan in a special kind of savings account.

As you make payments on this loan, they’re reported to the credit bureaus, and you establish credit. When the loan is finally paid off, you can access the money in the savings account.

Credit Score Ranges

So, once you actually have a credit score, what does it actually mean? What’s a good credit score? And then, what’s a very good credit score?

Well, lenders ultimately choose what terms they offer to what credit scores, but there are some broad credit score ranges that can help interpret what your credit score is considered.

For FICO, the ranges are:

• Poor Credit: 300-579
• Fair Credit: 580-669
• Good Credit: 670-739
• Very Good Credit: 740-799
• Exceptional Credit: 800-850

As with the factors that make up a credit score, FICO and VantageScore have some slight differences in their credit ranges. But in both cases higher scores typically mean lower rates, better terms and generally more options.

Bottom Line

Now that you better understand the early days of building credit and having a credit score, you can interpret your credit journey so far. Or if you have no credit history yet, you’re equipped to plan ahead.

If you are in the process of building or rebuilding your own credit, you may want to see if you pre-qualify for an offer from Credit One Bank.