Make Timely Payments
Since payment history accounts for 35% of your FICO score, it's important to pay your bills on time. This means paying all of your bills, not just your credit accounts, on time each month. If you fail to pay your bills, you risk a company reporting a late payment to the three major credit bureaus.
When you start using credit, you can expect to have a FICO score after six months of payment history, and a VantageScore in as little as 30 days. Since it can be hard for 18-year-olds to get approved for a credit card on their own, consider these strategies as you learn how to build credit.
However, as you can see above, the vast majority of 18-year-olds are credit-invisible, meaning that they have no credit history established with any of the 3 major credit bureaus (Equifax, Experian, and TransUnion).
The truth is that we all start out with no credit score at all. Credit scores are based on the information in our major credit reports, and such reports aren't even created until we've had credit (e.g., a credit card or loan) in our names for at least six months.
While you can sign up for your first credit card at 18, it's best to wait until you have confidence in your ability to pay off your balances on time and in full, while also balancing other financial obligations like rent, utilities, tuition, transportation and groceries.
It will take about six months of credit activity to establish enough history for a FICO credit score, which is used in 90% of lending decisions. 1 FICO credit scores range from 300 to 850, and a score of over 700 is considered a good credit score. Scores over 800 are considered excellent.
Contrary to popular belief, your credit score doesn't start at zero. The lowest scores start at around 300, but it's unlikely that you'll start this low, either.
Adding a minor as an authorized user can help build the minor's credit. In some cases, card issuers report to the credit bureaus the payment histories of every individual who has a card in their name — cardmembers and authorized users alike.
The Takeaway. It usually takes a minimum of six months to generate your first credit score. Establishing good or excellent credit takes longer.
In common credit scoring models, 300 is typically the lowest possible score. However, scores that low are extremely rare. There are two major credit scoring models: FICO and VantageScore.
As long as cold hard cash is the primary mode of payment for goods and services, you can live without a credit score.”
"There's no such thing as a zero score. Having “no score” simply means you don't have any number tied to your credit profile." "There's no such thing as a zero score. Having “no score” simply means you don't have any number tied to your credit profile."
What It Means to Have No Credit Score. When you have no credit score, it means that you've never opened a credit account, like a loan or credit card. Young adults often don't have a credit score because they don't have any credit in their name.
Credit card issuers are more interested in your income than your job. They also look at your credit history, credit scores and existing debt. You can meet the income requirement even without a job by including on your application any income you have access to. Even if your income comes up short, rest easy.
Unfortunately, a debit card typically will not help you build your credit. Despite similar looks, it can help to think of debit cards more like cash than like credit cards. And because debit card activity isn't traditionally reported to credit bureaus, it likely won't help with your credit scores.
You can begin building your child's credit whenever you want to by making him or her an authorized user on your credit card. Usually, you have to be at least 18 and have an income to take on a credit card or loan, which are the conventional ways that people start building credit.