Most people's initial credit scores are between 500 and 700 points, depending on the steps taken when establishing credit. However, you won't have a credit score to report if you've never opened a credit account. Read on to learn more about your starting credit score and how to build your credit over time.
The truth is, there isn't a set score number that you start with at 18. You don't begin on zero, for example. You may find that the CRA could struggle to find enough financial data about you the first time you try to check your credit reports.
You'll have enough credit history to generate a score when you've had a credit card or loan for six months. But your score won't start at zero, or even the lowest FICO score (300). Your first credit score will likely fall somewhere in the middle of the credit range of 300 to 850.
Nearly all lenders in the U.S., including Members 1st Credit Union, use FICO® Scores, as the industry standard for determining credit worthiness. Reviewing your FICO® Scores can help you learn how lenders view your credit risk and allow you to better understand your financial health. What goes into FICO® Scores?
A tier 1 credit score is the highest level of creditworthiness—it signifies that you have excellent credit and are a low risk borrower.
Basic Requirements for a First Bank HELOC: Minimum Equifax Credit Score of 680 (with other specific criteria met) Maximum Debt to Income Ratio of 40% (with verified income)
Starting from zero, building a credit score takes about three to six months of using credit, says Experian®. But getting an excellent score takes longer. If you're new to credit, it might take six months to a year to hit a respectable score of around 700 with FICO® or VantageScore® models.
If you have no (or little) previous borrowing history, and no track record on which to determine credit-worthiness, CIBIL will assign you scores of 0 or -1 respectively: CIBIL score 0 means that information about the borrower's credit history is available for only up to a period of less than 6 months in total.
Your credit score is a number between zero and 1000 (or sometimes 1200, depending on the credit reporting bodies), and lenders use this score or rating as one of the factors to decide whether to give you credit or a loan. The higher the score, the more likely it is that you'll get approved.
Having no credit history typically means you don't have a credit score at all. This is different from having a low credit score, which can stem from having limited credit history or negative reporting on your credit reports. If you have no credit history at all, building credit from scratch should be one of your goals.
What is the highest credit score possible? To start off: No, it's not possible to have a 900 credit score in the United States. In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U.S. have a maximum of 850.
Consider yourself in “good” shape if your credit score is above the average for people in your age group. Given that the average credit score for people aged 18 to 26 is 680, a score between 680 and 690 (the average for people aged 27 to 42) could be considered “good.”
You won't start with a score of zero, though. You simply won't have a score at all. That's because your credit scores aren't calculated until a lender or another entity requests them to determine your creditworthiness.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
"The time it takes to build good credit can be different for everyone. But it generally takes about three to six months to get your first credit score. The timing depends on factors like what your credit scores are now and how you're managing your debt."
If you have no credit, you have no score.
Without any credit history, you don't fall into any credit range. You're credit invisible. It wouldn't be fair at all to lump people who have made no mistakes in with those who have a low credit score because they declared bankruptcy.
When you formally apply for a personal loan, the lender will perform a hard credit check, which results in a temporary dip in your credit score. However, your score is not affected if a lender denies your application.
You can get a no-credit-check loan by applying through lenders that use alternative information, such as your income and banking history, to approve you. Alternatively, consider other ways to borrow, such as using paycheck advance apps. If possible, take time to build credit before you apply for a personal loan.
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.