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If you want to start building your credit score, but have not started the process yet, you are probably curious about what your starting credit score will be. Here is an explanation into what that score is, how it’s calculated, how you can improve it, so you can build your credit score properly early on.
It may come as a surprise but at first, we don’t have a credit score. Your information is not reported to the credit bureau until you take out a credit card or loan. And even when you do, it takes around 6 months for you to get your first credit score.
But, it does not necessarily mean that your starting credit score will be at zero. Each credit bureau conduct their scoring range differently, and on average, most start around 300.
The more established your credit history , the better the score. For example, about one-third of baby boomers have excellent credit. That is because they built up their credit over time. They probably have multiple credit cards or loans that have been opened for many years.
On the other hand, Millennials are just starting to build and work on their credit. Due to this, most start with poor to fair scores.
How Can I Calculate My Credit Score?
If you want to start building your credit, you will have to know how to calculate your credit score and what factors contribute to your score.
Data Image Retrieved from: https://www.experian.com/blogs/ask-experian/credit-education/faqs/credit-score-faqs
Here is a quick rundown of what factors into your credit score :
What If I Have Insufficient Credit History?
If you have insufficient credit history when you are first starting out, don’t panic. This is common in the beginning of building you credit score. Insufficient credit history means your credit isn’t old enough to meet the requirements of a lender.
If this is the case for you, here are some ways you can overcome this:
What Your Beginning Credit Score Means
Your first credit score will give you some insights that you can take into account for your future finances, such as:
The beginning of starting your credit score is not easy and it can take a few years to get your credit score to where you want it to be. This is why it’s a good idea to start early on, before you apply to take out a mortgage or car loan. Lenders want to see your credit history and scores, to make sure they can trust you as a borrower.
Although building your credit can be a long and confusing process, understanding how to lay the foundation for a good credit score early on will make it easier for you in the long run.
And if you have not started building your credit, you should consider doing so. You have a clean slate and now that you know what to do, you can go into building your credit score with confidence!
The post What Is My Starting Credit Score? appeared first on Owings Mills & Lutherville Mortgage.
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