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It’s logical to believe that if you have no credit score, your score would be zero.
However, it doesn’t actually work that way.
If you don’t have credit history, you simply don’t have a score. You don’t have a profile with the major credit bureaus yet. This means they can’t provide you with a score until you actually open up a credit account that reports to them.
FICO and VantageScore have a specific score range they adhere to. This range goes anywhere from 300 to 850. You also don’t start out with a 300 credit score when you begin building credit.
Your starting credit score is determined by how you use your line of credit.
Having an extremely low score can be a source of anxiety for some. Fortunately, you don’t have to be worried about anything when you begin working on credit. You don’t start at zero or the lowest rung on the scoring system.
As long as you adhere to good credit practices, you should experience as few issues as possible.
How Long FICO and VantageScore Take to Give You a Credit Score
So, how long is it going to take before you have a credit score others can find?
While it can take as little as one month, a good rule of thumb is three to six. You need to have an active credit account open and used monthly to get a credit score. You’ll also want to ensure that your lender actually reports activity to Experian, Equifax, and TransUnion.
Once you have enough activity, FICO and VantageScore will finally have a score for you to look at. However, this can be a little difficult to decipher for those who are new to credit.
How Are Credit Scores Calculated?
We’re going to look more closely at FICO credit scores because they’re the more popular scoring system. FICO Scores are broken down by:
- Payment History (35%). Your payment history dictates a large chunk of your score. Late payments can prevent lenders from offering you lines of credit. Always make sure you’re capable of paying back what you borrow.
- Amounts Owed (30%). Borrowers who are using more of their credit line and owe a substantial amount of money are high-risk. Don’t max out your cards and use all of the credit that is available to you.
- Length of Credit History (15%). The length of your credit history won’t play a major role in your score. However, longer histories do boost credit scores. This will come with time.
- Credit Mix (10%). FICO Scores will be impacted by the different types of accounts you have. But don’t worry about trying to collect all or sign up for ones you’re not ready for.
- New Credit (10%). Signing up for new accounts in rapid succession doesn’t inspire confidence in lenders. Make sure to only sign up for a new account when you can handle it.
What Should I Do to Build a Credit Score?
How exactly do you build a credit score if you don’t currently have one? There are several options at your disposal that you can leverage to get started. These include the following.
Get a Credit-Builder Loan
A credit builder loan is easily accessible and designed for people with low to no credit.
Traditional loan lenders will give you the money upfront. Credit-builder loans instead sit in a locked savings account. You then pay back a set amount to the lender each month.
Once you’ve reached the end of the loan term, you get the principal back plus interest. This not only helps you build credit but saves money while earning a little extra.
It also increases your credit mix because it is considered a type of installment loan. If this is something you’re interested in, a credit builder loan might be the perfect starting point for you!
Get a Secured Credit Card
Landing a credit card with a low credit score can be near impossible. However, traditional credit card options aren’t the only ones available to you. You can consider a secured card instead.
A secured credit card is backed by a deposit. For example, if you want a $1,000 credit line, you give the company $1,000. They’ll generally hang onto this until you’ve proven you’re a trustworthy borrower.
Then, they’ll likely give it back to you after a certain period of time. This helps you build credit without losing any money. You can then apply for a new card or look to raise your credit limit with that one.
Become a Credit Card Authorized User
If you’re looking to add more payment history quickly to your report, you may benefit from becoming an authorized user on a credit account.
One option you could talk about with someone close to you is becoming an authorized user. An authorized user on a credit card doesn’t have to apply individually. Instead, they’re added to the card by the person who owns it.
But even though you don’t have to apply, you benefit from payments. All activity is reported to the three major credit bureaus for you and the owner of the card. As long as good habits are maintained, this will certainly establish and boost your score.
Report Your Rent and Utility Bills
You have to spend money on essential expenses like rent and utilities. So, why not build your credit along the way?
Normally, your rent and utility bills aren’t reported to credit bureaus.
The solution? Look for a rent and utility reporting business that will do it for you. Many will even report other bills like streaming services and phone bills.
What to Do Once You’ve Done the Above Stuff
Using the resources above to build your credit is the first step. What you do next is the most important. Here are some tips to help you make sure you stay on top of your credit.
Pay Bills on Time
This is by far the most important tip to stick to.
Failing to pay your bills on time brings on a host of consequences. When you fail to make timely payments, you:
- Dramatically affect your credit score. The longer you fail to pay, the more it’s going to drop.
- Subject yourself to higher interest rates and late fees. This can make it more difficult to pay off your debt with time.
- Increase your financial stress and take away funds you need for other essentials.
Pay your bills on time to avoid consequences and keep your credit in good standing.
Pay Attention to Your Credit Utilization Ratio
You should never be using all of your available credit. This can actually damage your score.
The key is to always use below 10 percent. So, if you have a credit limit of $4,000, only use $400 of that. Your credit score will thank you!
The average credit score won’t be heavily impacted by credit mixes. However, having a mix of credit types can help.
Whether it’s credit cards, loans, or even mortgages, see how you can vary your lines of credit.
Monitor Your Credit Score Regularly
Make it a priority to check credit scores regularly.
Watching as your score changes can help you identify which behaviors lend themselves to a better score. Additionally, if you see a dramatic change, you can catch the issue quickly.
Sometimes there are mistakes on credit reports that need to be addressed. If you miss this, your credit can suffer when there’s nothing you’ve done on your end to lower it. Be aware of your score at all times.
Having no credit can be stressful. After all, you need credit to do basic things like apply for an apartment or get a car loan with a low-interest rate.
The good news? Building your credit is quite simple. It takes time, but it’s more than possible to raise your score quickly with the right strategies.
If you’re looking to start your credit journey, use the advice above and get your own line of credit today!
Dylan Buckley is a freelance finance writer and editor with 7 years of professional experience. Specializing in personal finance, cryptocurrency investments, and Fintech, Dylan is deeply passionate about creating content that helps readers make informed, confident financial decisions. He studied finance in college and maintains a credit score over 780.