Credit 101: What Is My Starting Credit Score? Is It 0?

Having decent credit is the gateway to getting many financial benefits in life. The thing is, though, most people don’t fully understand how it works or what their credit score even is.

Understanding how credit works is the first step to having good credit, which is the best way to set yourself up for good rates, credit cards, and mortgages. But how does credit start?

Are we just born with a credit score of 0, slowly building up our credit as our lives go on? Not necessarily. Read on to discover how to understand your starting credit score.

Understanding Your Starting Credit Score

You actually aren’t born with a credit score of 0, working your way up gradually. Your credit score comes into play when you are 18, and it typically plays off of your renting history, if you have any, or any other credit situations that you may have been a part of.

Credit scores can range anywhere from 300 to 850, with the lower credit scores being much worse than the higher ones. You are likely to start out with a really bad credit score, or a pretty good one.

This is because your credit develops over time, averaging out over a lifetime of financial decisions. That being said, when you are just starting out your financial life, you have a very small pool of credit decisions to pick from. In most cases, its just one or two right off the bat.

So, say you did a really bad job of paying rent while you were a freshman in college, and that’s your only experience dealing with any payments or similar methods of building credit. In that situation, you’d likely have a pretty bad score initially.

Alternatively, you may have had some very loving parents who paid your rent while you were working through school. If your parents were well off financially, it’s likely that all of your payments were on time and in the full amount. In that case, you probably started out with a sparkling credit score.

How to Develop Good Credit

It can be difficult to get started developing credit because most of the ways to substantially boost your credit require that you have decent credit in the first place. That being said, there are plenty of options out there that can help you out.

The first, and most common way of developing credit is buy purchasing a credit card. This is a dangerous one though, and it’s smart to get a credit card but only if you know that you can handle the responsibility. Try to own the card, only paying a little each month so that you can make the payments on time.

Another way to build credit is by taking out a credit builder loan. These are loans that can be taken out and kept in an account, only being released when you fully pay them off. You have to make payments on the interest of the loan, but the payments are manageable and you should be able to make them on time.

Need to Take Out a Loan?

Some loans require less of a credit score than others. In those cases, your starting credit score may not be as important as it would be otherwise.

If you’re in need of a fast loan and you live in South Africa, we may be of service to you. We’ve helped over 100,000 people so far and it’s likely that we could do the same for you.

If you’re interested and want to get started with a loan, contact us and we’d be happy to help.