What Does Your Credit Score Start?

What Does Your Credit Score Start?

Daydreaming about your credit score and how your relationship will start? Well, as you know, either from romcoms or personal experiences, everyone’s love story is a bit different. 

Over time, you and your credit score will grow together, but where do things start? You might assume that you’re starting with a clean slate and a credit score of zero, but you’d be wrong. We all come with some baggage.

Under the FICO score (one of the most widely used credit scoring models), 300 is the lowest credit score you can have, but that doesn’t mean you have to work your way up from there. So, where's the starting line if your score doesn’t begin at zero or 300?

There’s no such thing as a “starting credit score.” If you haven’t started using credit yet, you won’t have a credit score. Even if you’re turning 18, that doesn’t mean an automatic credit score is generated for you. You need to have used credit to have a credit score.

You begin to build your credit score after opening your first credit account. You can start with a credit card, student loan, or simply become an authorized user; all that’s needed is your social security number to be attached to an open credit account. 

Once your social security number becomes associated with a credit account, your credit-building career has begun. If you stick with the one account, your first credit report will reflect that; listing the payments, credit utilization, application, and anything else your lender reports to the three major credit bureaus. With the reported information, your credit history will begin. 

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How Long Does It Take For Your Credit Score To Appear?

You won’t have a credit score until your activity’s been reported to the credit bureaus, and even once reported, things don’t update instantly. When the credit bureaus receive your information, your credit score doesn’t refresh automatically; things take time to process.

Lenders and creditors aren’t required to report your activity by any particular date, but they are encouraged to report every billing cycle. Generally, you can expect your credit score to update every 30-45 days.

How High or Low Does Your Credit Score Start?

You’re not going to start with an excellent credit score, but you’re also unlikely to start with an absolute minimum of 300. Your credit score will lean towards the lower end of the spectrum, but it doesn’t have to remain that way for long. 

The credit score ranges are typically bad (300-629), fair (630-689), good (690-719), and excellent (720-850).

One factor that goes into credit scoring is your length of credit history. With you just joining the credit-building party, history will be one of your weaker points. The sooner you open an account that builds credit or become an authorized user on one, the better. 

Although credit history is calculated into your score, it’s one of the less significant credit scoring factors, accounting for about 15% of your score. You can mitigate having a shorter history by paying attention to things like making on-time payments and keeping your credit utilization low. If you handle your first few months of credit usage well, your score will most likely fall between 500 and 700.

We hate even to mention this, but if you do poorly with managing your first credit accounts, it can start you off in a pretty difficult position to move past (knock on wood). Let’s say you decide to open a credit card, use the entirety of your credit limit, and then don’t make any payments on it for months. In this case, your first credit score might hit rock bottom, and the blemish can remain on your credit report for years.

Whether you get off to a strong or rocky start, the most important thing is always looking to improve.

How To Establish and Maintain a Good Credit Score

It can feel overwhelming when life expects you to know everything about credit. We figured we’d start you off with some simple concepts that will steer you in the right direction.

If you want to step into the shallow end of the credit building pool, here are three light but helpful concepts you should start thinking about.

Authorized Users

An authorized user is given legal access to use someone else’s credit. If you become an authorized user, your social security number will be attached to an open credit account. This association is working to build your credit history.

As an authorized user, you might decide to use a card of your own or not. No matter the case, you’ll be seen as someone responsible for the account. You’re not obliged to pay the credit card bill or debts, but the credit card activity will be accounted for on your credit report.

Being an authorized user is a great way to start building credit, especially if you don’t want to open an account of your own. Just remember that if the account holder doesn’t keep up with their responsibilities, it can also reflect poorly on you. 

You’ll want to trust that the account holder will make sound financial decisions for both of you. We recommend you turn to a parent or grandparent that you trust completely. Once you become an authorized user and the creditor reports their relationship with you, you’ll start to build a credit history.

authorized users

Debit Cards That Build Credit

Although many are told that they need to open a credit card to start building credit, this simply isn’t the case; you can use a debit card! Extra is a debit card that helps you safely build credit.

Using a debit card rather than a credit card is an excellent option for anyone, especially beginners. By connecting the Extra debit card to your checking account, you can go about your regular spending (without a credit line) and build your credit. This means none of the dangers of credit card debt disrupting your peace and all the perks of credit-building brightening up your day.

Sign up for Extra by connecting your bank account, and they’ll start you off with a spending limit (Spend Power) based on your bank balance and other factors. The more purchases you make, the quicker your Spend Power will increase. 

When you swipe your Extra Card, they spot you for that purchase and automatically pay themselves back the next business day. They total up all of your transactions at the end of the month and report them to credit bureaus as credit-worthy payments.

Using Extra as a starting point in credit-building is an excellent choice. For all the deets, check out How Does Extra Work?

Credit-Scoring Factors

Understanding what factors impact your credit score is a great way to get ahead of the game. Similar to how a syllabus tells you what does and doesn’t impact your final grade, this introductory guide can do the same, but for your credit score:

  • Your on-time payment record - 35%
  • Your credit utilization - 30%
  • Your length of credit history - 15%
  • Your credit mix - 10%
  • Your recent credit applications - 10%

You'll be in pretty good shape if you pay attention to the five credit-scoring factors listed above and understand how they work. The best way to take full control of your credit score is by making thoughtful decisions, not just swiping and seeing what happens.

man and woman smiling outside while it's snowing

It’s Only Up From Here

Your credit-building journey will be a long one. There’s no need to start in overdrive; simple, smart, and strategic smooth-cruising will land you in the excellent credit score range you want to be in.

No matter what credit score you start with, there’s always room for improvement. The better your credit score, the more opportunities you’ll have to make big financial moves. Ultimately, your credit score will let you accomplish things like buying a car, lowering the interest rate on your student loans, or trying to purchase investment properties.

The possibilities are endless with the right tools and complete knowledge of how credit works.

What Does Your Credit Score Start? infographic

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