Have you ever wondered what credit score everyone starts at? You might be surprised to learn that it takes over six months to get to square one!
We all begin without a credit history, and reaching your 18th birthday does not automatically set the wheels in motion at the consumer reporting agencies.
Credit scores need data to make predictions about future behavior. Therefore, you have to build a file from scratch by borrowing money before getting your first rating.
Fortunately, you can find lenders willing to approve first-time borrowers without a consumer file or rating. Then, your behavior determines where your initial credit score will fall relative to the average.
What Credit Score Do You Start With?
There is no correct answer to what credit score everyone starts with or when you turn 18 because both questions incorrectly assume how the equations work.
Your unique behavior drives the first and subsequent numbers. There is no such thing as a default or baseline credit score because you have to establish history before getting an initial rating – so the equations have enough data to make a reliable prediction.
Establish a File
How do you start credit at 18 when you have no history appearing on your consumer report? Become a customer of an institution that caters to first-time borrowers and communicates payment activity to the bureaus.
- Take out a personal loan for 18-year-olds with no credit history: a small amount you can repay on time and according to terms
- Connect your apartment rental and utility bills with one of the reporting agencies to establish a file and have an alternative for invisible consumers
- Open a secured or college student credit card from a bank that reports your payment activity to the bureaus and establish your six-month record
When do you get your first credit score? You get your initial rating after establishing a consumer report with enough information for the equations to make a statistically sound prediction about future payment performance.
The minimum requirement for your first score has three elements.
- One or more accounts open for six months
- At least one account updated in the last six months
- The file does not flag the account holder as deceased
What is your credit score when you first start? Five behavior-based factors go into the equation that calculates your initial ratings – after satisfying the minimum consumer report standards.
- Payment record 35%
- Amounts owed 30%
- Length of history 15%
- The mix of account types 10%
- New credit activity 10%
Notice that age is not one of the five factors.
Your starting credit score will fall below the median number of 723 even if you pay all of your obligations on time and according to terms during the six-month evaluation period.
Expect your initial rating to fall to around 670 because you automatically perform poorly on three factors that combine to influence 45% of your number.
- Length of history (15%) will be at the bare minimum of six months
- The mix of account types (10%) will be weak because you have just one
- Lack of recent installment loan information
- Lack of recent revolving account information
- New credit activity (10%) will hurt from the hard inquiry and fresh tradeline
Your starting credit score could also move up or down from the initial 670 figure based on your balances at the end of the six-month evaluation period because the amounts owed make up 30% of your number.
A high or low utilization ratio (balance divided by the original principal or account limit) might add or subtract points from your initial rating accordingly.
- Utilization ratio below 30% (+20)
- Utilization ratio above 60% (-20)
Your starting credit score will fall further below the initial 670 figure if you are delinquent during the six-month evaluation period because payment history influences 35% of your number.
Derogatory payment statuses could subtract more points from your initial rating based on how delinquent the payments are today.
- Current was 30 days late (-10)
- Current was 60 days late (-20)
- 30 days late (-40)
- 60 days late (-50)
- 120 days late (-60)
FAQ on Starting Credit Scores
Scan through these answers to frequently asked questions about what credit score you start with. Gain a deeper understanding of where your first rating might fall. Remember, you do not have a default number when you turn 18.
Instead, your unique behavior drives the equations.