credit cards

What is the Starting Credit Score

If you’ve been “living” at all for a few years, you probably have a credit score. Credit cards, school loans, car loans, apartment rental or mortgage, even utility bills are reported to the credit agencies and your score is determined on several factors.

These factors may include if your payments are on time or late, how much you owe, how much you’ve already paid towards your balance, and with credit cards, how much revolving credit you have available. And your credit score fluctuates every few months or so if your payment history and available credit change.

But what is the magic number your credit score started at? Has your credit improved since then?

You may be surprised to know that your credit score starts at zero. That’s right; you have to start from square one so you can only go up from there. You aren’t automatically reported to the credit bureaus when you turn 18 or 21.

Because you start at zero, it is completely up to you to start building a strong credit score. Getting any score to register can take as long as six months from the first loan or credit application you apply for and receive. Getting that loan or credit card though can be a little tricky because you don’t have a credit score for companies to verify your good payment history. You’ll need to provide other information like showing proof of income, how long you’ve been at your job, where you live and how long you’ve lived there.

If you request a small loan or credit limit to start with, you’re more likely to be approved. Then you can start to build your credit score by repaying that loan on time and according to the terms. If you do that, you’ll start to build a little credit history so the next loan you apply for can be for a little more. Slowly you’ll be able to build your score by making your payments on time and keeping your credit card balances low.

Your credit score starts to build when you apply for a loan and the lender begins to report your account information along with your social security number. The lender will continue to report any updates to your account and payment information every few months so the more often you make payments on time and the more you pay off your balance, the higher your score will grow.

Your credit score is determined by analyzing your payment history and the amount of outstanding loan or credit card balances. Credit reporting agencies use your payment history and balances to predict if you will continue to be a good risk for credit.

Once you start borrowing, you’ll finally have a credit score about six months later, when you’ve developed a little bit of payment history.

The lowest credit score you can receive is 300 (very poor) and it goes up to 850 (a perfect score, although very difficult to acquire). The median number for credit scores is 723, meaning that half our population has a higher number and half has a lower number. Your first credit score will most likely fall below the median, but your payment history will determine how far below.

The longer you maintain a positive payment history with an acceptable amount of credit, the sooner your score will grow. Keep in mind though; one late payment or one collection account can have a significant and negative impact on your score.

Keep your payments current and over time you will be able to grow your score and you’ll be approved for more lines of credit.

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About the author

Emilie Burke

Emilie is a politics-major turned data engineer. She graduated from Princeton University in 2015 and from Smartly with her MBA in 2016. She lives in North Carolina with her college sweetheart Casey who is currently stationed at Fort Bragg. She enjoys eating food, cuddling with her dog, and binge watching HGTV. She blogs at Burke Does. You can find her around the web at @emilielimaburke.

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