What Credit Score Do You Start With And At What Age?
Are you going to apply for a credit card these days? Are you considering asking for a mortgage loan, or of any kind, in the next few months? You may not be planning to go into debt? In any case, you need to know your credit score and know what your profile looks like to the credit institutions because you do not know when you will have to resort to them. Credit history is not a synonym for 'unapproved application.' In fact, a good history can give you the opportunity to choose different options that best suits you, and not having to accept only one or the few products that fit your profile.
What Credit Score Do You Start With And At What Age?
When a person wants to acquire a loan, the credit score is undoubtedly the requirement on which the lenders focus much of their attention and that is why it is important that you know the range of your score. This rating has a range of 150 to 950 points, and the higher the score, the greater the chances of obtaining a loan, since for entities this means that you represent a lower risk. Therefore, it is important to have a credit score, even if it is a starting one.
What is a Credit Score?
The credit score indicates how likely it is that you honor or default on your financial commitments. The higher the score, the lower the risk that a potential customer will default on their payment obligation. It is important to know your credit score to monitor what level it is and know in advance if you need to improve it and identify what may be affecting it.
The credit score is a score determined by the institutions that grant loans or financial aid. The result establishes the probability that a person has to pay their obligations based on factors such as credit experience, use and balance of their credits, diversity, and number of institutions and financial products contracted, among other variables such as age.
Types of Your Credit Score
For those who have no credit or have not had a credit history for too long, here are some general types of credit score you should know about:
Amount Owed to Lenders
30% of the outstanding balance and the credit limit is used to calculate your FICO score
Payment History
35% of this is used to determine if you have paid your lenders on time and if you have had any liens, claims, or bankruptcies, it will also be considered in the formula used for scoring. The credit score will also be determined by the amount owed, the period of time the payment was late, and how recent the payment has been delinquent.
New Credit
10% of the calculation is for new loans you have opened or applied for. If the lender sees that you are applying for multiple loans in a short time period, it will appear as if you would be a risk to the lenders.
Credit History
15% of the FICO score has to do with the credit history and how you repay your loans or whether you are creditworthy or not, including the age of the loans.
Credit Mix
10% of the FICO score is determined by the various kinds of loans you have such as a mortgage or credit cards.
Credit Score Profiles
Do you want to know what credit score do you start with?
If you have 700 points or more:
It means that you have made correct use of your credits by paying on time, with good financial behavior patterns and without falling into impulses or excess credits. By having your credit history in order, the entities will trust you and will be able to offer you credit options with better interest rates.
If your points are between 400 and 699:
With this score, you can still access credit products on the market, but you must take care not to increase the loans so you can keep the rating stable and, if possible, you should try to improve the score by paying on time to increase the probability of accessing better rates.
If your points are less than 400:
This average credit score does not mean that the relationship with the credit system is in crisis, but what it reveals is that you probably have defaulted your payments or have exceeded the maximum amounts of credit, thus paying more interest that deteriorates the credit history. At this point, you should start with a plan of action to pay off your debts and improve that score.
What Is Involved With A Starting Credit Score?
If you have never had credit before, you have to start somewhere because the credit bureaus won’t have any information about your financial history unless you obtain some form of credit. However, if you were to acquire credit, you would fall into the ‘new credit’ category. As recommended in this article, you could start with a prepaid credit card and pay on time, so you can build your credit. You are also going to need a credit history, long enough for lenders to know your financial behavior.
If you acquired one prepaid card, then it would be ideal to also obtain a store card or a small loan. This shows creditors that you are fiscally responsible and can handle multiple financial obligations, all at one time. Try not to take on too many loans or credit cards at the same time. The lenders may see you as being high risk.
Take Care of Your Financial Future.
No Score vs. No History
If you have no credit score, you could still have a credit profile. However, the credit bureaus may not have sufficient details for lenders to know your credit history. Without a credit history, the bureaus cannot provide lenders with a credit score for you. You would fall into the ‘unscorable’ category. If you don’t have a credit history, it simply means that you have never acquired a loan or credit card. You may be the kind of person who prefers to use cash. You would be classified as ‘credit invisible.’ This is the same as having a poor or low credit score. Most lenders would deny you credit.
The credit score is a calculation that a credit bureau makes, based on the credit history, to determine a scalable number that represents the probability that the user will be either fiscal responsible or default on their financial commitments.
The credit history is the record of all your financial obligations within a specific time period, together with status and payment behavior.
Because of the credit history, you obtain a score that represents your credit risk; a good performance in the aforementioned elements is reflected in a higher score. This translates into the greater probability of payment and a lower risk of default. This number is a reference for companies, banks, and financial entities when deciding whether to grant you a loan or not.
How to Build Your Credit
Are you now aware of what credit score do you start with? With no credit or credit history, it is best to get a prepaid credit card or secured loan using collateral such as your personal vehicle. Once you acquire any of these things, make sure that you pay on time, so you can build your credit. You can use tools such as automatic debits or reminders to fulfill this obligation in a timely manner. In case of being in a difficult situation, the best option is to approach and speak with the lender.
- Use your prepaid credit card responsibly. The ideal is that your credit limit does not exceed 50%
- Pay your rent on time. Many landlords report to the credit bureau and this can affect you in either a negative or positive manner, depending on the action you take
- Pay your rent on time. Many landlords report to the credit bureau and this can affect you in either a negative or positive manner, depending on the action you take
- Request new credits only if they are necessary. Opening them and not using them does not improve your score and if it can bring you complications if you do not have good planning
- Acquire a store credit card and make sure that you purchase small items that you can afford to pay for
- Check your credit history constantly and check the registration of your data
Protecting Your Credit From Fraudulent Activity
You should always protect your credit and know what credit score do you start with. You should also keep your credit cards in a safe place and in proximity to you. Never give your credit card information to anyone. If you have to order anything online, make sure that it is from a secure website. Be sure to maintain your credit by monitoring it so you know if there are any changes or fraudulent activity. You can sign up for a fraud protection service where you will receive alerts of any new accounts opened in your name. If you have to log into your account, be sure that your password is encrypted and the site is secure.
Conclusion
Having a good credit score is possible if you keep control of it. You should not only consider it only when you go to make the credit application because by that time it can be very late. On the contrary, if you keep a constant review and try to comply with the recommendations to improve said score, the probability that the response to your request is positive will be very high. We hope these credit tips were useful to you. If you want more information about this topic, go to the Goalry platform and enter their Creditry and Loanry store. You will receive tons of good content you can use to further build, maintain and protect your credit.