What does your credit score start at

what does a credit score start at

You may wonder, “What does your credit score start at?” If you are new to the financial industry, you may be wondering if you are one of the 26 million Americans who don’t have a FICO score.1

In this article, you’ll learn more about where your credit score starts and how you can work up to and maintain a healthy credit history! 

What Is a Starting Credit Score?

What is an initial credit score? You may think that a zero credit score is the starting point for people new to finances. But this is not true. Your first credit score will most likely be 300, as this is the lowest score credit scoring models usually recognize. However, the average credit score of established borrowers is 710.2

Credit scores generally range from 300 to a perfect score of 850. Here’s a breakdown of how most lenders view different credit scores: 

Credit Score RangeRatingWhat It Means
800-850ExcellentYou’re in top shape! Lenders see you as a very low risk, leading to better loan terms and rates.
740-799Very GoodYou’re doing well! You’ll likely get competitive interest rates and have high approval odds.
670-739GoodYou’re in decent shape, but there’s room for improvement. Rates may be slightly higher.
580-669FairYou’re seen as a subprime borrower. You’ll face higher interest rates and may need a co-signer.
300-579PoorYou’re a high-risk borrower. You may face difficulty in getting approved for credit.
*This chart provides a general guideline for understanding your credit score. Keep in mind that different lenders may have slightly different criteria, but this should give you a good starting point.

How Do Credit Scores Work?

A credit score is a three-digit number that indicates a borrower’s creditworthiness to a lender. A higher score indicates financial responsibility, while a lower score indicates a borrower may be a financial risk. 

Your credit files and data are recorded by major credit reporting agencies and given to lenders and financial institutions upon request. 

The three major credit bureaus are:

Before you receive approval for a loan or another financial product, your lender will most likely reach out to one of those three credit bureaus for your official credit report. 

What Is the Difference Between a Credit Score and a Credit Limit?

It is essential not to confuse credit scores with credit limits. A credit score is a part of an individual’s financial history and helps lenders determine eligibility for installment loans and other financial products. A credit limit is an indication of the maximum amount of revolving debt an account holder may accumulate in a billing cycle. 

How Are Credit Scores Calculated?

How is a credit score calculated? Generally, five main financial factors go into determining a credit score. Check out more information on those factors below. 

Payment History (35%)

Payment history accounts for 35% of your overall credit score, making it the most influential factor. To improve your payment history on your credit report, you want to make payments for your bills, loans, and other expenses on time. Missing payments may result in a decline in your credit score, as well as late fees or other financial inconveniences. 

Credit Mix (10%)

Credit bureaus also collect data on your different types of credit accounts. Having a healthy mix of accounts shows you are an experienced borrower, which may make lenders feel more comfortable with lending to you. To benefit the most from your credit mix, try to have more good debt vs. bad debt

Good debts are debts that come with other benefits besides providing money. For example, student loans or auto loans are often considered good debts because they offer money as well as an education (for student loans) or an automobile (for an auto loan).  

Credit Age (15%)

From the time you open your first credit account, you begin to establish a credit history. Borrowers typically like to work with borrowers with a longer credit history because it means they have more experience in the financial industry. 

Debt Compared to Income (30%)

How much a person owes in various debts compared to how much income they bring in regularly accounts for 30% of their credit score. 

To calculate your debt-to-income (DTI) ratio, follow these 3 steps:

  1. Add up your current balances for your credit cards, student loans, car loans, mortgages, or any other loans you have. 
  2. Calculate how much money you bring in regularly by totaling up your yearly salary and other recurring income you may have. 
  3. Lastly, compare how much you owe with how much you bring in. This comparison is your debt-to-income ratio. 

Hard Credit Inquiries (10%)

How often you apply for new credit accounts matters. Whenever you apply for a loan or other financial product, lenders perform a hard credit check. A hard credit check is an official inquiry into your credit history. Your credit report records data on how many hard credit checks you acquire, so you want to keep them relatively low. The more hard credit checks on your credit file, the more your credit score may decline. 

Benefits of Credit Scores 

What’s the point of having a good credit score? Check out some of the awesome benefits below that can come with boosting your credit score! 

Higher Loan Amounts

Borrowers with good credit scores are more likely to receive approval on unsecured loans with high funding amounts. When credit scores are on the higher side, that means you have cultivated a credit history showing that you make payments on time and are likely to successfully pay off your loan. 

Lenders typically feel more comfortable lending higher loan amounts to these types of borrowers because there is a good chance they will make back their investment.  

Better Interest Rates

In addition to higher loan amounts, lenders usually extend lower interest rates to borrowers with optimal credit. When interest rates on a loan are lower, borrowers pay less overall during the course of their loan terms. 

Wider Variety of Financial Products

Borrowers with bad credit, unfortunately, have a limited option of financial products to choose from. Many lenders are wary of lending to borrowers with poor credit because it means they are at potential risk of paying late or defaulting. 

But when borrowers have excellent credit, most lenders are automatically willing to work with them. Therefore, higher credit scores give borrowers the advantage of picking from a variety of financial products when they need money. 

More Likely To Receive Perks From Lenders

People with higher credit scores also have a better chance of receiving perks from lenders and other financial institutions. For example, if you have a credit card, your credit card issuer may note and see that you have good credit and raise your credit limit. They may also send you offers for other cards or products they think you will receive approval for. 

How To Establish a Strong Credit History

Building credit and maintaining a positive credit history is vital to anyone looking to prioritize their financial health. Check out the helpful tips below on how you can establish a strong credit history and maintain it! 

Keep Your Credit Utilization Low

First, you want to try to keep your credit utilization ratio as low as possible. Typically, you want to keep your credit utilization ratio no higher than 30%. Your credit utilization refers to how much you have in available credit compared to your general income. 

Some factors that may be considered in your credit utilization are: 

  • How much money you are using on your current credit card limit. 
  • How much you are using on credit limits for other financial products. 
  • Your gross income. 
  • The amount you owe on bills or loans, such as payday loans
  • Funds in your savings account. 
  • Value of stocks or other investments. 

Check Your Credit Score Often

All borrowers are entitled to a free credit score report once a year. You can also check your unofficial report through most banks or credit card issuers. 

While you are only entitled to one free copy of your official credit report each year, you can perform soft credit checks as often as you like for credit monitoring purposes. A soft credit check is an unofficial credit report but reports on most of the same credit data that is included in your official credit reports. 

Checking your credit reports often gives you a real-time look at how your financial situation and spending habits affect your credit. If you see constant declines in your score, you may want to pinpoint the specific acts that are causing your score to go down and adjust your behaviors. 

Make On-time Payments

Lenders like to see that borrowers are using their credit responsibly and making payments on time. Since the history of your payments is the most important factor that helps determine your credit score, making all your payments on time is vital. 

To ensure you never miss a payment, you may want to sign up for autopay. With autopay, money will automatically be taken out of your account on the due date of any bill or expense you choose. You can even choose your automatic withdrawal day to be the day when you receive a paycheck to make sure you always have sufficient funds. 

Try a Credit Builder Loan or Secured Credit Account

If you have poor credit and are looking for ways to help boost your score, you may try a credit builder loan or a secured credit card. Secured accounts help people with less-than-ideal credit scores receive funding in a way that may help them improve their credit.

Utilize Credit Reward Programs

You can also take advantage of credit reward programs to boost your credit score. For example, Experian Boost is a program that includes smaller bills, like phone bills or subscriptions, in your credit report. With a program like this, you can reap the rewards of making each and every payment on time, even for small expenses. 

Frequently Asked Questions About FICO Scores 

What is the average credit score, and why does it matter?

The average credit score can vary by age, location, and other factors. Knowing the average can give you a good benchmark to compare your own score against. If your score is below average, it might be a sign to work on improving your credit history.

Can closing a credit account affect my credit score?

Yes, closing a credit account can impact your credit score. It may reduce your available credit, which in turn could increase your credit utilization ratio, a key factor in your credit score.

How long does it take to establish credit for the first time?

Establishing a credit history for the first time can take about 6 months. Your first credit score will be generated after you’ve had a credit account open for at least six months, provided there’s enough activity to generate a score.

What is a good credit utilization ratio to maintain?

A good credit utilization ratio to aim for is below 30%. This means you should try to use less than 30% of your available credit across all your credit accounts. Keeping this ratio low shows lenders that you’re not overly reliant on credit.

How can I improve my starting credit score?

If you’re starting with a low credit score, consider opening a secured credit account or becoming an authorized user on someone else’s account. Always pay your bills on time and try to pay off debts to improve your credit history.

How do on-time payments affect my credit score?

On-time payments are crucial for building a good credit score. The history of your payments accounts for a significant portion of most credit scoring models, including the FICO credit score. Consistently making payments on time can positively impact your score and show lenders that you’re a reliable borrower.

What’s the difference between FICO credit score and other credit scoring models?

The FICO credit score is one of the most widely used credit scoring models, but it’s not the only one. Other models may weigh factors differently, but they all generally consider similar elements like payment history, credit utilization, and length of credit history. Knowing your FICO score can give you a good idea of where you stand, but different lenders may use different models.

How can I build credit from a low credit score start?

If you’re starting with a low credit score, don’t worry—you can build it up. Consider opening a secured credit card or taking out a small cosigner loan that you can repay easily. Make sure to make all your payments on time, as this will positively impact your credit score. Over time, responsible credit use and on-time payments will help you achieve a good credit score.

CreditNinja – What You Should Know About Your Starting Credit Score

Once you start applying for credit and borrowing money, you will soon develop a credit history and credit score. Remember that there are several ways to build a good credit score, such as avoiding late payments and keeping your outstanding debt amount low. 

If you are just starting to build credit or have a low credit score, try applying for a versatile CreditNinja personal loan. We work with all types of credit scores! Apply online today if you have a good reason to borrow money to see how much you could get. 


  1. Millions Miss Out Because They Are ‘Credit Invisible’ │ The New York Times
  2. Minnesota residents have the highest average credit score │ CNBC
  3. Credit Reports and Scores │ USAGov
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