When you turn 18, you do not automatically have a credit score. This is because credit scores are based on the information in your credit report, and as an 18-year old, you likely do not have any credit history yet. Credit history is built over time as you borrow money, take out loans, or open credit card accounts.
Without any credit history, credit reporting bureaus have no data to calculate a credit score for you. So, when you first become an adult, you essentially start with a blank slate in terms of credit scores.
However, this doesn’t mean you can’t start building credit as soon as you turn 18. There are several ways you can begin establishing credit.
1. Become an authorized user: If a family member or close friend is willing to add you as an authorized user on their credit card, you can start building credit. The primary cardholder’s payment history and credit utilization will be reflected on your credit report, helping you establish a positive credit history.
2. Apply for a secured credit card: A secured credit card requires a cash deposit as collateral, which becomes your credit limit. By responsibly using the secured card and making timely payments, you can demonstrate your creditworthiness and start to build credit.
3. Apply for a student credit card: Many banks offer credit cards designed specifically for students. These cards often have lower credit limits and more relaxed approval requirements, making them a good starting point for building credit.
4. Apply for a credit-builder loan: Some financial institutions offer credit-builder loans, which are specifically designed to help individuals establish credit. These loans typically have a small borrowing amount, and the funds are often held in a savings account. As you make regular payments on the loan, the lender reports your activity to the credit bureaus, helping you build credit.
Once you have started building credit, it’s important to manage it responsibly. Make all your payments on time, keep your credit utilization low, and avoid taking on more debt than you can handle. Over time, as you establish a positive credit history, your credit score will gradually improve.
Remember that building credit is a gradual process, and it takes time to develop a strong credit score. Patience and responsible financial habits are key.