When you start thinking about building credit, you may ask yourself: where am I starting? What credit score am I starting with? The answer to that question will be unique to you; there is no one starting credit score that people must climb their way up from. Scores can be all over the map, due to a multitude of reasons, many of which we’ll break down here.

1. What is a Credit Score?

2. How Do Credit Scores Work?

3. What Goes Into a Credit Score?

4. How is Your Credit Score Calculated?

5. How to Start a Credit Score

6. How to Stay On Top of Your Credit Score

1. What is a Credit Score?

A credit score is a three-digit number summarizing your credit risk, based on your credit data. A credit score helps lenders evaluate your credit profile and influences the credit that’s available to you, including loan and credit card approvals, interest rates, credit limits and more. For example, most FICO® Credit Scores range from 300-850 based on your credit history and can be viewed as a summary of your credit report.

2. How Do Credit Scores Work?

Credit scores are comprised of various criteria that make up your credit history. Before your personal credit history (such as number of accounts, on time payments, etc.) appears in a credit bureau’s file, your credit history simply doesn’t exist yet. Once you start to get approved for credit products such as credit cards and loans, you begin to build a credit history.

Until you meet the minimum criteria, you just won’t have a score, and the credit bureaus will communicate this to lenders.

In order to receive a valid FICO® Score, the credit report must have:

  • At least one account opened for six months or more, and
  • At least one account that has been reported to the credit bureau within the past six months, and
  • No indication of deceased on the credit report

The minimum scoring criteria may be satisfied by a single account or by multiple accounts on a credit file.

3. What Goes Into a Credit Score?

While there are various credit scores, 90% of top lenders use FICO® Credit Scores, including Discover.* While the exact FICO® Score formula is proprietary, FICO breaks down the general categories and weight additionally. According to FICO, these percentages refer to the general population, but may vary from one person to another—for instance, the relative importance of the categories may be different for consumers who have not been using credit long.

  • Payment History: 35%. Payment history is the historical record of whether you’ve paid your credit accounts on time. This includes records from credit cards, retail accounts and loans, plus public records such as bankruptcies. For each late payment, the scoring formula takes into account how late the payment was, how much was owed and how recent the delinquency was.
  • Amounts Owed: 30%. This is the amount of money you owe lenders. This includes your outstanding balances, and also how that compares to the total amount of credit you’ve been extended, which is called your credit utilization ratio.
  • Length of Credit History: 15%. The longer your record of repaying loans is, the more you are seen as creditworthy. The FICO® Score looks at the age of your oldest account, as well as the average age of all your accounts.
  • New Credit: 10%. This piece of a FICO® Score refers to the number of new credit accounts you’ve applied for or opened. This is relevant since those who apply for many new loans in a short period of time could be seen as posing a greater repayment risk to lenders. FICO® Scores only consider inquiries from the last 12 months.
  • Credit Mix: 10%. The different types of credit accounts you have matter, from credit cards to a home mortgage. This factor may be more important for people who have a limited credit history.

4. How is Your Credit Score Calculated? 

Your credit score is calculated based on your unique credit history. When you are new to credit, your information available at the credit bureaus may be enough to calculate your score from the above mix of credit behavior, but it may be thin. What you need is a longer credit history.

One way to help your credit scores overtime is to make on-time payments. Another is to diversify the types of credit you have over time. For example, if you have one credit card, getting another or getting a different type of credit service, such as an installment loan, shows that you are capable of handling credit options responsibly.

Be careful, though — getting too much credit too soon can be a sign to potential lenders that you’re high risk.

5. How to Start a Credit Score

Building a credit history will start you on your way to having a credit score. If you’re ready for your first credit card, it may help you get started. If it makes sense for you, you might want to consider applying for a card with no annual fee.

Once you’ve kicked things off, there are many ways to keep track of your credit score. First, start by checking your score regularly. If you have a credit card, you might check with your issuer. With Discover, for example, cardmembers get a free Credit Scorecard with your FICO® Credit Score and important information behind it.* You can also ask for a full credit report annually from the three major credit bureaus via AnnualCreditReport.com.

6. How to Stay on Top of Your Credit Score

First, keep track of your credit regularly for unexpected changes. As mentioned above, you may be able to do so through your banks or credit card provider, and federal law requires each of the three nationwide credit bureaus (Equifax, Experian and TransUnion) to provide one free credit report per year.

Second, set up automatic payments, through online bill pay, to help ensure all your bills are paid on time. Every missed or late payment can have an impact on your credit. Setting up automatic payments helps eliminate human error from the bill payment process while saving time and avoiding late fees.

Finally, use credit smartly. Don’t max out your credit cards, and don’t apply for credit you don’t need. Manage how much of your credit line you use and, if possible, make additional payments to reduce how much of your credit line you’ve used.

In Conclusion

You now know a lot more about your starting credit score, and the good news is that whatever your initial score is, there are several ways to build a positive credit history — and keep a good credit history and credit score.

Originally published Aug. 21, 2017

Updated September 20, 2021

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FICO® Credit Score Terms: Your FICO® Credit Score, key factors and other credit information are based on data from TransUnion® and may be different from other credit scores and other credit information provided by different bureaus. This information is intended for and only provided to Primary account holders who have an available score. See Discover.com/FICO about the availability of your score. Your score, key factors and other credit information are available on Discover.com and cardmembers are also provided a score on statements. Customers will see up to a year of recent scores online. Discover and other lenders may use different inputs, such as FICO® Credit Scores, other credit scores and more information in credit decisions. This benefit may change or end in the future. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

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