What Does Your Credit Score Start At?

Posted by in Credit Scores | Updated on August 23, 2022

As an adult, it’s only natural to be concerned about your credit score. After all, it can affect many aspects of your life, from something as minor as getting a smartphone plan to something as major as buying your first home.

In this article, we’ll answer what your credit score starts at as well as some questions that you may have about this topic!

Why Your Credit Score Doesn’t Start at Zero

To say it simply, your credit score doesn’t start at zero because it measures how creditworthy you are. If your credit score is zero, that just means you don’t have any credit history whatsoever. After all, zero means there’s nothing to base the score on.

Instead, it starts at 300, at least for FICO credit scores. That said, it’s very rare that you’ll actually start out at 300, unless you have very poor financial habits.

Here are the ranges for a FICO credit score:

740-799Very Good

You should aim to get at least a 670 credit score in order to qualify as “good.” However, the real goal is to get to the 800 range. With a credit score of 800, you get benefits such as low interest rates and fast credit card approvals.

If you’re wondering how long it takes to get a credit score, it doesn’t actually take that long. Usually, after six months, you should already see something on your credit report.

It’s also important to note that there’s no set formula to know how often your credit score updates. It’s recommended to check at least once a year, though, just to make sure that you’re still right on track.

What Goes Into Determining a Credit Score?

There are many things that go into determining a credit score, particularly FICO scores. This is what most lenders and financial institutions use.

For FICO specifically, some of the factors include your payment history and credit history length. We’ll discuss this in more detail below.

How Your Credit Score is Calculated

It’s critical to know how your credit score is calculated in order to maintain a good score.

According to FICO, here are the factors that affect how your credit score is calculated:

  • 35% Payment History. The most substantial factor that affects your credit score is your payment history. More specifically, whether or not you can make payments on time. It doesn’t matter even if you only pay the minimum amount – as long as you still pay on time each month, it will reflect positively on your credit score.
  • 30% Amounts Owed. This refers to your credit utilization ratio. It includes your outstanding balance on your credit cards, your loans, and your installment purchases. It’s best to keep this number below 30%.
  • 15% Credit History Length. A longer credit history is seen as more trustworthy. The only way to increase your score based on this factor is to keep using your card responsibly and paying your bills and loans on time.
  • 10% Credit Mix. Credit bureaus also look at the mix of credit accounts you have. Just like the previous item, it also hints at your creditworthiness. Having only credit cards is less impactful than having some credit cards and one auto loan, for example.
  • 10% New Credit. Did you know that a hard credit inquiry is made every time you apply for a new credit card or loan? If you do too many applications within a short period of time, it can lower your credit score.

Keep in mind that the exact percentages may vary depending on the individual. For some people, their amounts owed may have more weight than their payment history, while for others, their credit mix may be more substantial than their number of new credit applications.

How to Establish and Build Good Credit

The simplest step to establishing and building good credit is getting a credit card.

By getting a credit card, you can start a credit history with credit bureaus. Over time, your credit report will become an accurate representation of what you’re like as a payer and a borrower. This will tell other institutions whether they should lend you money, approve your mortgage, or issue another credit card to you in the future.

Of course, if you want to know how to get an 800 credit score, you need to learn good financial habits.

Here are some of the things you can do:

  • Always pay on time. It doesn’t have to be the full amount if you can’t afford it, although we definitely recommend paying in full if you can. However, always pay at least the minimum. Not doing so will affect your credit score – and not in a good way.
  • Set up automatic payments. Unless you have a perfect memory or are extremely diligent, there’s always the possibility that you might forget to pay a bill on time. While paying a few days late once won’t harm your credit score considerably, it can negatively affect you if it happens multiple times. Avoid this by setting up automatic payments.
  • Don’t max out your cards. Maxing out your cards causes two bad things to happen. One, your credit utilization ratio will be too high, which isn’t a good sign to lenders and financial institutions. Two, using up too much credit will make it less likely for you to be able to pay it back.

Starting Credit Score FAQ

Got some questions about starting your credit score? Here are some of the most frequently asked questions!

At What Age Does Your Credit Score Start?

Your credit score typically starts when you’re 18 years old since that’s the age that most people are able to get a credit card or rent an apartment on their own.

What Is a Credit Utilization Ratio?

Credit utilization ratio, also known as credit utilization rate, refers to the amount of credit you’re using compared to the total amount of credit you have. For example, if you have a total credit limit of $10,000 and you’ve got $2,000 tied up in installments right now, your credit utilization ratio is 20%.

Can You Have a Credit Score Without a Credit Card?

It’s perfectly possible to have a credit score even if you don’t have a credit card. As long as you have a financial transaction with a company that reports to the credit bureaus, you can establish credit. For instance, some landlords report rental payments to credit bureaus, which means they will reflect on the renter’s credit score.

What is Considered a Bad Credit Score?

Generally speaking, a bad credit score is one that scores below 670 on the 300-850 scale. Some still consider 580 to 669 a fair score, though. This means you still have a chance of getting approved for traditional loans or credit – albeit a very poor one.

Is No Credit Better than Bad Credit?

In most cases, having no credit is still better than having bad credit. While people who don’t have credit may have trouble getting their first credit card or something similar, people with bad credit are bound to get outright rejected for loans, mortgages, or even renting an apartment.

Starting a Credit Score: Wrap-Up

As you can see, starting a credit score isn’t difficult at all. As long as you learn and practice good financial habits, you can have a credit score of 800 in no time at all.

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