Key takeaways
- Your credit score doesn’t start at zero. If you’ve never engaged with credit before, then you either have no credit or you may be considered credit invisible.
- How you use your first credit accounts shapes your initial credit score, underscoring the need for responsible credit use from the outset.
- Even without a credit card, you can develop good credit by pairing healthy credit habits with other forms of credit like student loans or credit builder loans.
- Factors like on-time payments, low credit utilization, forms of credit, credit inquiries and age of accounts each impact your credit score.
When you’re just starting to learn about and use credit, a brief internet search may tell you that credit scores range from 300 to 850. But if you’ve never applied for a credit card or taken out a loan then starting at 300 seems a little unfair, right? Instead of starting from the bottom, you’ll actually start with no credit score instead — and that’s not as bad as you might think.
Implementing the behaviors to establish good credit is essential to what credit score you start with, but that’s after meeting the criteria to get past the no credit history phase.
What does your credit score start at?
What is the starting credit score? That answer doesn’t technically exist. The truth is there’s no such thing as a “starting credit score.” Some people wonder whether the starting credit score is zero, for example, or whether we all start with a credit score of 300 (the lowest possible FICO score).
If you haven’t started using credit yet, you would have no credit history and no credit score — also referred to as unscoreable or credit invisible. Starting from scratch with your credit score isn’t a bad thing. It just means the credit bureaus don’t have enough information to assign you a score yet. A more effective question to ask is how you can build the best credit score possible.
When does your credit score start?
You begin to build your credit score after opening your first line of credit, such as a credit card or a student loan. At that point, your credit score is determined by the way you use that initial credit account.
As lenders report your credit activity to the three major credit bureaus (Equifax, Experian and TransUnion). The three bureaus information related to how you use your credit into your credit report. Credit scoring companies, FICO and VantageScore, for example, then use information from your file to generate your score. You won’t find a credit score in your credit report, but your report is used to determine your score.
It takes time to collect enough information in your credit file to generate a score. You’ll need to meet FICO’s minimum scoring criteria first. To meet that criteria, you must have:
- 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.
So if you opened your first credit card yesterday, don’t expect to see a credit score tomorrow.
Important note
You can meet these requirements with just one account or several, but keep in mind that lenders may not report to all three credit bureaus. If you only have one or two lines of credit and those lenders don’t report to all three bureaus, you could end up with a “thin file” or no file at all with certain bureaus.
While you’re waiting for your new credit score to populate, it’s vital to use your credit accounts responsibly since the way you use them informs what your credit score will be. If you use your first credit account responsibly, you could establish good credit before you know it.
How is your credit score calculated?
If you want to build and maintain a good credit score, you need to know how a credit score is calculated. Your FICO credit score is based on the following five factors:
- Payment history (35 percent): Your history of on-time payments is the largest factor behind your score. Even if you can only make the minimum payment on your credit cards, make it on time.
- Amounts owed (30 percent): This is your credit utilization. Try to keep the amounts you owe below 30 percent of your available credit. If you have a credit card with a $1,000 credit limit, for example, try to keep your outstanding balance below $300. If your balance gets any higher, do your best to pay it off as quickly as possible.
- Length of credit history (15 percent): How long you’ve been using credit is another key factor in building your credit score. If you are new to credit, your credit history isn’t going to be very long — but it’s only a matter of time.
- Credit mix (10 percent): The different types of credit accounts under your name strengthen your credit history. Your credit score could improve if you have both revolving debt (like credit cards) and installment debt (like loans) in your credit history — but don’t worry if you haven’t taken out any loans yet. You can still establish a good credit score with just credit cards.
- New credit (10 percent): The last factor of your credit score is based on how often you apply for new credit. Try to wait three to six months between credit applications to avoid lowering your credit score with too many new credit requests.
What are the FICO credit score ranges?
In addition to understanding how a FICO credit score is calculated, it’s a good idea to know the FICO credit score ranges. FICO scores range from 300 to 850, and are divided into the following categories:
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Very Poor: 300-579
Your goal should be to get your FICO score above 670 as quickly as possible. Once you have good credit, you’ll be able to apply for some of today’s best credit cards and are more likely to qualify for lower interest rates on loans. Plus, it’ll be easier to reach your financial goals like taking out a mortgage, buying a car or signing up for a new smartphone plan.
Can you have a credit score without a credit card?
Is it possible to build credit without a credit card? Yes — but you still need to have at least one line of credit associated with your name. If you take out a student loan or a car loan, for example, those credit accounts become part of your credit history and help establish your starting credit score. You could also build credit by using these methods:
- Becoming an authorized user on a trusted friend or relative’s credit card.
- Apply for a secured credit card.
- Using a service like Experian Boost to add eligible bill payments to your Experian credit report.
- Applying for a credit builder loan.
Without a credit card, where does your credit score start? It all depends on how you use the other credit accounts under your name. If you make on-time payments on your student loan, for example, you’re doing the work of building a positive credit history. If your payments are consistently late, your credit history — and credit score — might not be as good.
How to establish and maintain good credit
Think of building and maintaining good credit as a marathon — not a sprint. It takes time to develop a positive credit history and the healthy credit score that goes along with it. So it’s more about building good habits than finding quick fixes.
Start simple by building the habit of paying your bills on-time, every time. It’s the most heavily weighed factor in your credit score, so focusing on it can get you far.
Next you’ll want to learn more about credit utilization and how to keep your revolving debt balances in check. Then, as the need arises, mix it up by diversifying the types of credit under your name to improve your credit mix; don’t take out unnecessary loans for the sake of trying to build your credit.
From there, you’ll want to avoid unnecessary credit pulls and stay consistent with the credit building behaviors you’ve learned along the way.
How to check your credit score
If you are new to credit, it’s a good idea to check your credit score before applying for credit cards or loans. That way you won’t waste a hard credit inquiry applying for a credit card designed for people with excellent credit while you’re still in the fair credit range.
Many banks and credit card issuers give you access to free credit scores as part of their online banking. Credit monitoring services provide weekly credit score updates and track potential threats to your credit (like identity theft attempts). You can also access your credit score through certain personal finance apps.
Some free credit score services will provide you with a VantageScore instead of a FICO score. VantageScore is one of FICO’s main competitors — and although its scoring system is slightly different from FICO’s, the credit ranges overlap. If you have good credit with VantageScore, you’ll likely have good credit with FICO.
The bottom line
Your credit score doesn’t start at zero, but no matter how you choose to build a credit history, it’s imperative to start off on the right foot. You can establish good credit by selecting the right credit card to meet your financial goals and habits, making on-time payments, keeping your balances low and tracking your credit history as it grows.
These steps will help you establish a positive credit history, build good credit and set you up for a lifetime of responsible credit card use. There’s no such thing as a starting credit score, but you have a lot of control over where your credit score ends up.
