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 eighteenth 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.  

Credit Score When Turning Age 18

Your starting credit score when turning eighteen has nothing to do with your milestone birthday. You may now be old enough to vote or join the military. Still, it does not mean that the bureaus have enough information to make a reliable prediction about your future behavior.

You have to overcome your lack of borrowing history by establishing a file with the three major consumer bureaus. Then, you will have your starting number after six months of making payments.

No Credit

You do not have a credit score at age eighteen when you have no credit history. Each equation has minimum requirements for information on a consumer report. Therefore, they will not begin to output a valid number until your file meets these three standards.

  1. One or more accounts open for six months
  2. At least one account updated in the last six months
  3. The file does not flag the account holder as deceased

Young adults with no borrowing and payment history must pass through three phases before seeing their starter credit score.

  1. The bureaus declare a “No Record Found” on the first hard inquiry when applying for a new account
  2. The agencies return a “Too New to Rate” during months one through six after the opening of your first borrowing account with active payments
  3. The equations produce the starter credit score after they have enough data to predict future payment performance: one account updated in the last six months

Establish & Build

You may be wondering, how does an eighteen-year-old establish and build their credit score when they have no borrowing or payment history? Begin to feed your consumer report the information it needs to make a reliable prediction: become a customer of an institution that reports payment activity to the bureaus.

However, the trick is getting approved before you have a starter credit score. Young adults can build their borrowing credentials through three reliable channels.

  1. Make payments on one federal student loan while in school rather than deferring until graduation since the government approves everyone who completes the FAFSA form
  2. Connect your apartment rental and utility bills with one of the reporting agencies to establish a file and have an alternative credit score for invisible consumers
  3. 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
  4. Take out a small credit builder loan where the primary qualification is a steady income and valid employment rather than a non-existent score

Estimating First Credit Score

The exercise of estimating your first credit score can commence after you have established a consumer credit report with at least one tradeline with a minimum of six months on record. Five factors go into the equation that calculates your initial and subsequent ratings.

  1. Payment record 35%
  2. Amounts owed 30%
  3. Length of history 15%
  4. The mix of account types 10%
  5. New credit activity 10%

Begin at 300

Credit scores do not begin at zero, as the Celsius temperatures. Vantage made a past effort to scale from 0 to 100, which would have made things easier for all to understand. However, the concept never caught on.

Instead, the industry coalesced to a standard range set by FICO decades ago that works more like the Fahrenheit temperatures. The scale starts at 300 (worst) and ends at 850 (best).

The median number is 723, which means that 50% of the population has a higher number, and 50% has a lower figure. Expect your first credit score to fall below the median because you automatically perform poorly on three factors that combine to influence 45% of your rating.

  1. Length of history (15%) will be at the bare minimum of six months
  2. The mix of account types (10%) will hurt because you have just one
  3. New credit activity (10%) will be weak due to the new tradeline

No Default Number

Everyone does not start with the same default credit score because the two remaining factors have the most significant impact (55% combined) and have the broadest range of possible inputs. Your behavior drives where your first rating will fall, not a baseline setting.

Your payment record (35%) could be perfect or delinquent.

  • Current accounts paid as agreed might add 10 points
  • Derogatory payment statuses could subtract more points 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)

Your amounts owed (30%) could reflect a high or low utilization ratio (balance divided by the original principal or account limit) and might add or subtracts points accordingly.

  • Utilization ratio below 30% (+20)
  • Utilization ratio above 60% (-20)

In conclusion, you control what credit score you start with after opening your first account six months earlier. However, do not expect to reach the 700’s until you have more time on file and better tradeline diversity.