If you are or are turning 18, then you may be wondering what this means in terms of your credit score. Many of those turning 18 are concerned about what their credit score will be, and how they can alter this, or increase their credit score in order to be eligible for loans and credit in the future.
If you are looking to gain a loan, look for your first apartment, home or apply for your first credit card as a young person, then you will need to know what your credit score is, and how you can build it up! So, what even is a credit score?
What Is A Credit Score?
Your credit score, in the most basic sense, is the number that shows an individual’s creditworthiness. This number is typically between 300 and 850, and describes how creditworthy a borrower is to a potential lender.
When you apply for a loan or a credit card, you will undergo what is referred to as a hard check, or a hard pull of your credit score and credit history.
During this check, a potential lender will pull all of your credit information such as your debt history, whether you have outstanding debt, overdue payments, whether you have ever missed a payment, and whether you are a responsible borrower or not.
A credit score is basically a very quick and fast way to gauge whether you are eligible for a loan or credit card, as it will tell lenders whether you have a low score, due to missed payments or a bad credit history.
What Does Your Credit Score Start At When You Turn 18?
Contrary to popular belief, you will not just start out with a credit score when you turn 18.
However, this does not mean that you start with a score of zero either! When you turn 18, if you have not had any credit before, then your credit score simply does not exist.
A credit score will only be calculated after a lender or credit card issuer has requested it from major credit bureaus to check your credit worthiness when you apply for a loan/credit. If you have no credit history, then you will have no credit score.
The lowest scores are around 300, whereas the highest scores are about 850. So, when you apply for your first line of credit, will you be starting at 300? Well, no this is actually highly unlikely as you would not have had any bad credit habits before. You will also not start at the highest score.
When you first apply for and have established credit, your initial credit score will probably range anywhere between 500 and 700. This can also change depending on how well you manage your credit within the first few months of having it.
Things such as missed payments, high credit utilization and how many credit accounts you open will vastly decrease your credit score quickly.
To ensure that your credit score remains at the higher end of the scale, and so you can build credit, try to maintain responsible use of your credit cards and loans.
What Is The Average 18 Year Old’s Credit Score?
The average credit score for an 18 year old, building their credit is about 600. However, it may take a few years to build up your credit score substantially, as an 18 year old would be in the first stages of using credit.
In addition to this, it will take at least six months for your initial credit score to be generated, as the lender will need to send information to the major bureaus about your credit history and habits, such as how quickly you pay off your bills, and whether you use the credit excessively or not.
After this information is shared, you will have an overall credit score.
Therefore, you will have to use the credit card for a few years to really build on your score and achieve the score that you want.
For most of those in their early twenties, the average score is about 662. This rises to about 673-700 for people in their thirties, and rises over 700-800 for those above 40 and 50.
How Can I Build My Credit Score At 18 With No Credit?
So, as an 18 year old, what can you do to build your credit score? Well, once you have an initial score, you will be able to improve it. For most lenders, a score of 650 or more is considered good, and a score of over 800 is the best of the best!
The higher your credit score is, the easier it will be to be approved for loans or credit, and you will get the best rates and offers.
This may also affect your eligibility when it comes to renting apartments or housing. So, you will want to build your score as best as you can.
To build your score, use a credit card responsibly. This means putting a few items or purchases on the credit card each month, but not using it excessively or using up your credit limit.
In addition to this, you will need to pay every single bill on time, and make sure that you do not miss any payments. You should also not apply for multiple loans or credit cards, and always keep track of your balances and payments.
If you make payments on time, pay off balances, never incur any fees or charges, and do not apply for multiple credit cards and loans, then you can build up your credit in a couple of months.
The best advice we can give is to be responsible with your credit, keep track of it, and set up automatic payments so that you never miss one!