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It’s natural to be curious about what credit score you start with at 18. You might assume you start with the lowest possible score of 300, but that’s not how it works. Instead, your credit score doesn’t exist until you begin generating financial data.
Good credit is vital if you want to be financially independent. When you need to borrow money for a home or car, having early credit can help you get approved for favorable terms and rates. Here’s what you need to know about beginning credit scores and how you can build yours.
Yo, turning 18 is a big deal. You’re finally an adult, legally speaking. But what about your credit score?
Turns out you don’t actually start with a credit score at all. You’re born outside the system. Even when you turn 18, you aren’t automatically assigned a credit score. According to the common FICO credit scoring method, you need to meet some basic requirements to be eligible for a credit score.
Here’s the lowdown:
- You need to have at least one credit account that has been open for at least six months. This could be a credit card, a student loan, or even a secured credit card.
- Your credit account needs to be reported to the credit bureaus. Not all lenders report to all three credit bureaus (Experian, TransUnion, and Equifax), so it’s important to check with your lender to see which bureaus they report to.
Consequently, you won’t have a credit score if you don’t have any credit history. That being said, there are a few steps you can take to begin establishing your credit history:
- Become an authorized user on someone else’s credit card. This means that you’ll get a credit card in your name, but the primary cardholder will be responsible for the payments.
- Get a secured credit card. This is a credit card that requires you to make a security deposit. The deposit will act as your credit limit, and you’ll be able to use the card to make purchases.
- Take out a small loan. This could be a personal loan, a student loan, or even a car loan. Just make sure that you can afford to make the payments on time.
Once you have some credit history, you’ll start to build a credit score. Your credit score is a number that represents your creditworthiness, and it’s used by lenders to determine whether or not to approve you for a loan and what interest rate to charge you
Here are some tips for building a good credit score:
- Make your payments on time. This is the most important factor in your credit score.
- Keep your credit utilization low. This means that you shouldn’t use more than 30% of your available credit.
- Don’t apply for too much credit at once. Every time you apply for credit, it shows up on your credit report and can lower your score.
- Check your credit report regularly. Make sure that there are no errors on your report, and dispute any errors that you find.
Building a good credit score takes time and effort, but it’s worth it. A good credit score can save you money on interest rates, help you qualify for better loans, and even help you get a job.
So, what are you waiting for? Start building your credit score today!
Frequently Asked Questions
Q: What is a credit score?
A: A credit score is a number that represents your creditworthiness. Lenders use it to decide what interest rate to charge you and whether to approve you for a loan.
Q: How do I get a credit score?
A minimum of one credit account that has been open for a minimum of six months and has been reported to the credit bureaus is required.
Q: What is a good credit score?
A: A good credit score is generally considered to be 670 or higher.
Q: How can I improve my credit score?
A: You can raise your credit score by paying your bills on time, minimizing your credit utilization, avoiding making multiple credit applications at once, and routinely monitoring your credit report.
Q: What happens if I don’t have a credit score?
A: If you don’t have a credit score, it will be more difficult to get approved for loans and you may have to pay higher interest rates.
Additional Resources
Is a credit score of 720 good?
Yes, a 720 credit score is considered good. Nevertheless, adding 20 points to your score will make it extremely high and enable you to get better terms and interest rates.
Does credit build before 18?
If you have a secured credit card or are an authorized user on an adult’s account, you can establish credit before the age of 18. Many financial products, such as loans and credit cards, require you to be 18 or older to apply. Being an authorized user can be your first opportunity to establish credit history.