4 min read
Oct 05, 2020
October 05, 2020
No, the answer is not zero
Maybe you think that all credit scores start at zero (such a lonely number), and you have to climb your way up from there. But it doesn’t work like that. Credit scores range from 300 to 850. Even someone with no credit doesn’t start at zero. Credit scores start at 300; sometimes higher, depending on which scoring system is used.
According to FICO, you must have at least one credit account that’s been open for at least six months, and one credit account that’s been reported to credit bureaus within the past six months to have a credit score. You can meet these requirements with one account or several.
Everyone has to start somewhere. No one is born with excellent credit; you have to earn it. Although several factors determine your starting credit score, it’s not uncommon to start at the bottom, or 300. That’s considered poor credit. But to be honest, when you’re just starting out or before you’ve applied for any credit at all, you have no credit score.
FICO assigns numbers for credit scores that range from 300 up to 850. Someone with poor credit has a credit score in the range of 300 to 580. Someone with excellent credit has a score in the range of 800 to 850.
The big three credit agencies–Equifax, Experian, and TransUnion–look at five factors to calculate your credit score:
If you have no credit history, you are “credit invisible.” That means none of the three major credit bureaus have a credit history on you. That might be because you’ve never applied for credit or you’ve paid for everything in cash. If you’ve never used credit or applied for a loan, you’re “credit unscorable.” That means that you may have a credit file at the major credit bureaus, but there’s not enough history to calculate a credit history.
Most of the time you can check your credit report for free. There are four main ways to check your credit score, according to the Consumer Financial Protection Bureau.
That depends. Since credit history carries the most weight (35%) in determining your overall credit score, paying your bills, including credit cards, loans, rents, etc., on time every month (or when they’re due), will build your credit score faster. If you pay your bills only some of the time on time, it will take a little longer to reach the magic number of 700. In fact, making late payments is like taking two steps forward and one step back. Your credit score will actually drop.
Your credit score basically lets lenders know if they can (or can’t) count on you to repay your debts. When you’re just starting out, or you’ve just turned 18, you have no credit or very little credit. Maybe you’ve just opened a credit card but have no payment history. And since there’s no zero credit score, you’ve got to start somewhere, and that’s usually at 300. It can be higher, depending on the scoring system, but it will likely be right around 300.
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