What Credit Score Do You Start With?

Decisions you make early in your financial life are important because they determine your starting credit journey — there’s no set initial number. Simple parts of managing your finances, like making on-time payments and paying your balances off monthly on credit cards, can go a long way to a high starting credit score.

Knowing what credit score you start with, how it’s calculated and how to build and maintain a good score is crucial to getting the best rates and terms on credit you take out in the future.

You start with no credit score until you use credit

A credit score is like a grade in school — you can’t get one unless you turn in some homework. In this case, your homework is opening a new credit account and making payments on it. If you have no credit history, you’ll have no credit score.

In that case, the credit world deems you unscorable or credit invisible. You might develop a FICO score if you’re an authorized user on a parent’s credit card when you’re young. That score, however, is also tied to how your parents manage the credit card you’re attached to.

It should also be noted that no credit isn’t the same as bad credit. No credit means the credit reporting agencies don’t have enough information to generate a score for you. This blank slate allows you to focus on building the best credit score from the start.

When does your credit score first appear?

Your credit score will generally show up one to six months after you open your first account, or you are added to someone else’s account as an authorized user. As lenders report the credit activity from this first account to the three major credit bureaus (Equifax, Experian and TransUnion), this information will show up on your credit reports.

Credit scoring companies, such as FICO and VantageScore, then use your credit reports to generate your credit score. It takes time to collect enough information in your credit file to generate a score.

As an example, FICO’s minimum scoring criteria includes:

• At least one credit account opened for six months or more
• At least one credit account that has been reported to one of the three major credit bureaus within the past six months

5 ways to get your credit score off to a good start

Credit scores are calculated using the information on your credit reports. Each element of your credit is weighed differently depending on the credit scoring model used. If you want to kick-start your credit score in the best way possible, do the following:

1. Pay on time. Payment history makes up 35 percent of your FICO credit score. Making on-time payments is the biggest factor affecting your score. Even if you can only make the minimum payment on your credit cards, make it on time. One late payment can drop your credit score significantly.
2. Keep your credit card balances low. The amount you owe impacts 30 percent of your FICO credit score. It’s calculated by dividing the amount you owe by your available balance or, in credit score language, your credit utilization. Ideally, you want to keep your credit utilization under 30 percent. For example, if you have a credit card with a $1,000 credit limit, aim for a balance of $300 or less.
3. Don’t close out accounts. How long you’ve been using credit accounts for 15 percent of your FICO credit score. This part of your score is all about patience — keeping your accounts open and in good standing can help boost this part of your score.
4. Have a good mix of credit. Having both revolving and installment loans reported to the credit bureaus improves your credit mix, which makes up 10 percent of your FICO credit score. Examples of revolving credit include credit cards and personal lines of credit. The most common types of installment loans are personal loans, mortgages, car loans and student loans.
5. Open new credit wisely. The last factor is all about how often you apply for new credit and affects 10 percent of your FICO credit score. Applying for credit results in a hard inquiry. Having several of these inquiries in a short period is bad for your credit. Try waiting at least three to six months between credit applications to avoid damaging your credit score.

FICO score vs. VantageScore: Why it matters to your first credit score

Your first credit score will either be a FICO score or a VantageScore. Although FICO is the most common, VantageScore is becoming more widely used, so you’ll want to know the differences when your first score shows up.

FICO scores

Your FICO score is a three-digit number created from information about your credit use. FICO has become a fixture in the industry, used by many lenders to determine your creditworthiness and assess what kind of terms you should get on loans.

FICO scores range from 300 to 850 and are divided into five categories.

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

Once you have a good credit score of 670 or better, you’re more likely to qualify for higher limits on the best credit cards and lower interest rates on loans. This could save you hundreds of thousands of dollars in total interest if you need a loan to buy a home, a car and in some cases, to get the lowest car and home insurance premiums.

VantageScore

VantageScore is a rapidly growing scoring alternative to the FICO model. It is currently used by over 3,700 banks, fintechs and other companies to vet creditworthiness on a daily basis. It uses a different model than FICO, which generates scores for people previously considered unscorable. While this scoring model is similar to FICO, the ranges are a bit different.

• Superprime: 781 to 850
• Prime: 661 to 780
• Near prime: 601 to 660
• Subprime: 300 to 600

You’ll want to hit the good, or prime, range of a VantageScore to enjoy lower interest rates, better approval odds and discounted insurance rates.

Can you have a credit score without a credit card?

Although four out of five American adults have a credit card, it is possible to build credit without a credit card. First, you’ll need to have at least one credit account associated with your name. If you have a steady job, you might qualify for a small personal loan, which would help you establish a credit score after several on-time payments.

Having multiple accounts open is better for the credit mix part of your score. Other options for building your credit without credit cards include:

• Applying for a credit builder loan, a type of secured loan
• Using a service like Experian Boost to add eligible rent and bill payments to your Experian credit report
• Signing up for a non-credit card revolving line of credit, like PayPal Credit

Not having a credit card can negatively affect the credit mix and credit utilization portions of your credit score. Maxing out a credit card, however, could also send your score tumbling if you aren’t able to pay the balance off monthly.

How Bankrate experts built their credit scores

How our experts’ credit scores changed with credit card consolidation loans

Seychelle Thomas, a credit card writer at Bankrate, used a personal loan to consolidate her debt. The strategy, combined with some smart follow-up credit card choices, helped boost her score from 717 to over 800 within two months.

Read more about her score-raising strategy

How to keep track of your credit score once you have one

There are many free resources for checking your credit score, including services offered by banks and credit card issuers you may have accounts with. Consider using a credit monitoring service to get regular credit score updates and alerts about potential fraud. You can also get free weekly credit report updates through AnnualCreditReport.com, although these will not include your credit score.

Bottom line

For the most part, your first credit choices will set the stage for the credit score you start with. There’s no gimmick or trick that guarantees a specific beginning score. Following tried-and-true tips, like paying on time and avoiding too much credit card use, could help your fledgling score grow nicely.

If you mess up along the way with a maxed credit card or missed payment, you can always get back on track by going back to the basics: pay on time, pay your balances off and avoid opening too many new accounts at once.

Frequently asked questions

• Is no credit worse than bad credit?
  

  No. Your choices with bad credit are more limited than they are with no credit. A bad credit score indicates you have trouble managing credit. This makes lending to you risky. It is also harder to recover from a bad score than to build up from no score.

• How long does it take to get good credit?
  

  There’s no set timeline for establishing good credit. Understanding what impacts your scores and being thoughtful about what type of credit you use can lead to a good credit score quickly. Make a budget and stick to it. It can take months or years to build credit, depending on your spending habits.

• How can you get credit with no credit history?
  

  When you start, it’s difficult to qualify for a credit card or loan. So how can you begin building your credit when you keep getting denied new credit? Here are a few strategies to look into:

  • Opening a secured credit card or loan
  • Using a rent reporting or utility reporting service
  • Getting added as an authorized user to someone else’s credit card
  • Asking friends or family to cosign a loan