You know that it’s worthwhile to maintain good credit. But what’s the credit score that you should aim for? And how do you get there? We’re going to break it down for you.  

What is the highest credit score you can get?

A 900 credit score may be the highest on some scoring models, but this number isn’t always possible. Only 1.31% of the population can achieve a credit score of 850, so there’s a certain point where trying to get the highest possible credit score isn’t realistic at all. Having good credit can start at around 700. In fact, only a few credit score models have a credit score limit of 900. For instance, both the FICO and VantageScore models max out at 850.

How are credit scores calculated?

You don’t only have one credit score. Credit reporting bureaus calculate your credit score differently. We explain the most popular credit model, which is FICO, and from there, you’ll be able to understand how credit bureaus calculate your credit score. 

How is your FICO credit score calculated?

Here’s how FICO looks at your financial history and ultimately calculates your credit score.

• Payment history: 35%
• Debt or amount owed: 30%
• Length of credit history: 15%
• New credit: 10%
• Credit mix: 10%

5 Benefits of an excellent credit score

Solid credit scores open up a lot of doors. Here are just a few reasons why raising your credit score is worthwhile. 

1. Access to a range of loan products

It will feel like lenders will practically be beating down your door to give you money to buy a house or a car if you have an excellent credit score. But beware of the risks associated with opening too many loan products, like credit cards, since overspending can be tempting. Make sure you don’t spend above your budget and undo your hard work.

2. Better chance of rent approvals 

Your credit score is often the first thing that landlords look at when going through rental applications. Your high credit score will help you stand out in the rental process. It can make it easier to secure your dream apartment and give you leverage when negotiating your rent amount.

3. Larger credit limits

Larger credit limits allow you to use more of your lender’s money. This factor has its obvious benefits, but there’s a little more to it than simply having access to more credit. Greater credit limits also make it possible for you to keep a wider distance between your balance and the amount of credit you have available. This is your credit utilization ratio, and it plays a key role in influencing your score. The more available credit you have that you’re not using, the stronger your score will be.

4. Insurance discounts

One of the first things that insurance providers look at during the approval process is the credit scores of applicants. Lenders label people with high credit scores as more reliable, and they are more likely to approve candidates with stronger credit than those with low scores. 

For instance, in the realm of auto insurance, individuals with excellent credit scores might qualify for significant discounts on their premiums, which could potentially lead to more favorable terms and reduced overall costs for their coverage.

5. Better interest rates

Better interest rates are the result of better credit scores. When you have a strong credit score, your interest rates will be lower when you take out personal loans, credit cards, mortgages, and car loans. You’ll be able to access lower monthly payments and you’ll save over the lifetime of your loan. More savings on interest translates to more money in your budget.

8 ways to achieve a perfect credit score 

You can find many ways to raise and fix your credit score. Here are eight helpful tips. 

1. Maintain a consistent payment history

Consistently paying back debt can be the best way to raise your credit, but it takes time. Speaking of time, make sure you pay your bills on time. Create a pattern of consistency that you can show to lenders, and you will start to see your credit rise over time. 

2. Monitor your credit score regularly

Make sure there aren’t any major snags along the way as you work to raise your credit score. Monitor your credit score regularly. Ideally, you should check in at least once a month, especially since different lenders or creditors will process at different times.

Regularly monitoring your credit score is crucial because it allows you to catch errors or discrepancies early. This process helps ensure that your credit report accurately reflects your financial history. If you notice anything that seems off, you’ll want to contact the credit bureau to report a mistake. 

PRO TIP! Building your credit is easier than you think. It starts with knowing and understanding your score, creating goals, and then monitoring your credit as you take steps to build it.

3. Keep old accounts open and use them sporadically 

Your credit score is affected by your credit history as well as how long you have been building your credit. Your old accounts play a key role in defining the length of your credit history. Keep old accounts open and make sure you use them from time to time. 

4. Report your on-time rent and utility payments

Your credit is affected by the payments that you make, including rent payments and utility bills. Make sure the major credit bureaus know that you pay your rent and utility payments on time because this information can help you increase your credit score.

5. Increase your credit limit when possible  

As you pay your bills consistently, ask your credit card company for a credit limit increase. Having higher credit limits is a sign that you can be trusted to pay your bills on time. This action will translate to a higher credit score over time as well. 

6. Avoid maxing out your credit cards 

Your credit score has the potential to decrease when you max out your credit cards because your credit utilization ratio will drop considerably. Your available credit should be much higher than your credit utilization. If you do max out your credit card, make sure to pay it all off in the same billing cycle.

7. Balance your credit utilization 

It’s best if you keep your credit utilization rate at 30% or less. For example, if your credit limit is $5,000 in total, then your credit utilization balance shouldn’t exceed $1,500. 

8. Consider a credit-building loan

A credit-building loan is a type of loan specifically designed to help individuals with limited or poor credit history build up their creditworthiness. Unlike traditional loans, the primary purpose of a credit building loan is not to provide immediate funds but to demonstrate responsible borrowing behavior to credit bureaus.

So, how does a credit-building loan work? Instead of receiving a lump sum of money upfront, the loan amount is typically held in a savings account or a certificate of deposit (CD). You then make regular monthly payments on the loan, just like with any other loan. However, the payments are not used to pay off the loan but are reported to credit bureaus as on-time payments, which can help positively impact your credit history.

PRO TIP! A good credit score can lead to lower interest rates and increased borrowing power on loans and credit cards. MoneyLion offers a free and convenient way to find offers from our trusted partners to help you improve your credit.

The Power and Perks of a 900 Credit Score

A 900 credit score may seem like a lofty goal — which is why it’s not always attainable. The good news is that you don’t need a 900 credit score to have good credit. Good credit starts at around 700 and improves over time. As long as your score is within the 700 to 800 range, you should have optimistic approval odds and some leeway on negotiating lower interest rates. All in all, building good credit is a process — not a one-and-done. It’s important to stay consistent and practice smart financial habits for the long run!

FAQ

What do cell phone companies consider when evaluating your application?

Cell phone carriers, also known as mobile service providers, are just like any other company: They want payments coming in. A fast way to go out of business is by allowing customers to rack up too many unpaid bills. Because of that, carriers often take your credit score into account when considering whether you qualify for a contract — even if you don’t have a credit score.

What do these companies consider a good score?

There’s no standard minimum credit score needed for a cell phone contract. The guidelines for a good or bad credit score rating are typically: 600 and above is good; 700 and above is great.

A number of factors can impact your credit score, either negatively or positively, and your score is always subject to change. These criteria include payment history, credit history, amount of credit use, and credit mix. A bad credit score can suggest to mobile carriers that you have trouble paying your bills, making getting a phone with bad credit challenging.

Difference between a soft credit pull and hard credit pull?

Not all inquiries into your credit status will affect your credit score. That’s the difference between a hard credit pull and a soft one. In contrast to a hard credit pull, a soft credit pull doesn’t show up on your credit reports and doesn’t affect your scores. Soft pulls are checks carried out by a lender to preapprove you for a loan offer and also by some cell phone companies.

When you apply for any type of loan, the creditor checks your credit through a hard inquiry. Limiting the number of applications will keep your credit score from being dinged too often because each hard pull remains on your record for two years.

Tips for getting a phone contract with bad credit 

Have poor money decisions crippled your credit score? We’ll tell you how to help raise your credit to the credit score needed for a phone contract and which some of the best cell phone plans are for people who do have bad credit. 

1. Prepaid plans 

Unlike traditional cell phone contracts, prepaid plans allow you to pay a fixed amount to your cell phone provider each month. Paying in advance means there is no risk for the service provider, so you don’t need a credit check.

2. Pay as you go

Pay-as-you-go plans are another good option because they allow you to keep from overspending. If you aren’t going to be able to afford your phone that month, that allows you some flexibility with your priorities.

3. Month-to-month

A month-to-month contract is a great way to get a phone contract with bad credit . You get plenty of data allowance, plus unlimited texts and minutes. You’re not tied to a contract, and you can change carriers at any time.

There is a drawback to paying month to month — it may cost you more upfront because you have to pay full price for your phone. But month-to-month plans can save you hundreds of dollars over a few years because of their customizable options. 

On the other hand, some long-term cell phone contracts allow you to pay for the phone gradually as part of your monthly payment. Those may encourage you to upgrade to the newest phones as they come out, allowing you to pay in installments, rather than shelling out hundreds of dollars at once for the new phone. 

4. Join a family plan

If you’re worried about the minimum credit score for cell phone contracts, you can get a cell phone without having credit or while having bad credit by joining a family plan. Family plans have a primary account holder with a good credit score who adds extra lines to their main account. The additional line holders’ credit scores aren’t considered because they aren’t responsible for the account. You can affect the primary account holder’s credit if you don’t pay on time. 

The family plan option typically offers the best rates. You can split the bill with other people in the plan and pay low-rate flat fees for unlimited services.

5. Pay a security deposit 

If you’re able to fork out some cash in the form of a security deposit, a good credit score isn’t necessary. The amount of a deposit needed for a wireless carrier to hand you a contract will still depend on your credit score. If your score is in the tank, you may need to shell out hundreds of dollars per line. The good news is you typically get your deposit back after a year if you are consistent and timely with your bill payments.

Prepaid or month-to-month cell phone plans:

If a prepaid or month-to-month plan is more suited to your needs, here are some of the best options for your needs

Best Deal: 

Mint Mobile

• Plan: Mint Mobile 12-Month Plan
• Price: $30 per month
• Key features: Unlimited talk, text, and data; 35GB high speed, then continued service at 3G

Best Prepaid Plan:  

AT&T

• Plan: AT&T Prepaid
• Price: $30 per month
• Key features: Unlimited minutes and text messages; 5GB high-speed data

Best Coverage: 

Verizon 

• Plan: Verizon Prepaid 15GB Plan 
• Price: $35 per month with autopay 
• Key Features: 5G nationwide coverage, International texting, Mexico and Canada talk, text, and data 

Best Unlimited Plan: 

Visible 

• Plan: Visibile
• Price: $25 per month 
• Key Features: Unlimited talk, text, and data, 5G nationwide and 4G LTE, and Unlimited mobile hotspot 

Get a cell phone even with bad credit

You can still get a cell phone with bad credit if you know where to look. The plans listed above are great alternatives to long-term cell phone contracts and may be cheaper in some cases. If you eventually want to go for a contract or if you’re after the latest iPhone iterations, your best bet is to improve your credit score. 

Here are some ways to help raise your credit quickly:

• Pay down your revolving credit balances.
• Pay your bills on time.
• Have negative entries on your credit report removed if you’ve paid them off.
• Add regular payments like utility bills and phone bills to your credit report.
• Dispute inaccurate information.

The FICO auto score is a concept that’s often misunderstood by both car buyers and lenders. It can make the difference between getting approved for a car loan or being denied. Understanding what a FICO auto score is and how it differs from a regular FICO score can help you get the financing you need when buying a car. Read on to learn more about FICO auto scores. 

How does a FICO auto score work?

FICO is one of the major credit rating bureaus that collects data and provides credit scores. According to MyFICO, your credit score based on the following factors as of 2023: 

• Payment history: 35%
• Credit utilization rate: 30%
• Length of credit history: 15%
• Mix of credit: 10%
• New credit: 10%

FICO first calculates your traditional credit score and adjusts the calculation based on auto-industry-specific details. FICO will give more weight to your past auto loan payments, including whether you’ve paid them on time. From there, it will determine your unique FICO auto score, which typically ranges from 250 to 900. 

FICO auto score vs. regular FICO score

The main difference is that FICO adjusts the calculation based on auto-industry-specific details. Typically, your auto loan payment history will weigh more heavily on your FICO auto score than your regular FICO score. 

The same factors that influence your regular FICO score, including credit utilization rate and overall payment history.

How do I find out my FICO auto score?

Although you can view your regular credit score online for free through various sites, your FICO auto score is a different story. 

Often, you’ll have to purchase your auto loan credit report to view your FICO auto score. 

Which FICO score do car dealerships use?

Car dealerships may look into either or both your regular FICO credit report and your FICO auto score. 

What is the FICO auto score range?

FICO auto scores range on a scale from 250 to 900. The higher the score, the better your creditworthiness and the more favorable the terms and interest rates you’re likely to receive when applying for an auto loan.

What is a good FICO auto score?

Many lenders consider any credit score above 700 to be a good score. Exact figures can vary by lender.

Do you need a FICO auto score to buy a car?

Some lenders will only accept a specialized credit score, such as a FICO auto score. Other lenders may be more lenient and only look at your regular credit score. Contact your desired lender to ask about its specific credit score requirements. 

Things to consider with FICO auto score 

Below are some key points to keep in mind about FICO auto scores. 

Your base score still matters

FICO auto scores are derived from your base credit score. Although auto loan payment history matters more on your FICO auto score, many other traditional factors will still play a role. 

A good credit score isn’t always clear

Most lenders consider any figure above 700 to be a good credit score, but some may require a higher number. The best way to know is to contact the lender you plan to work with. 

Credit utilization rate 

Most lenders want to know you’re responsible with your credit accounts. This is best translated through your credit utilization rate. Ideally, you want to keep your credit utilization rate at or below 30% to keep your base credit score and FICO auto score healthy. 

Mistakes can happen 

It’s not uncommon for people to find mistakes or incorrect information on their credit reports. This holds for auto credit reports as well. Make sure to double-check that all the information is correct. If not, contact the credit bureau and file a dispute. 

You can improve your FICO auto score

Even if you have a couple of derogatory marks or late payments on your auto loan credit report, you can still aim to improve your FICO auto score.

Advantages of a FICO auto score

FICO auto scores are a great way for auto-industry-specific lenders to understand how trustworthy you are when it comes to managing car payments. Even if you’ve lacked in other credit areas but you managed to stay on top of your auto payments, then your FICO auto score may be higher than your base score. 

Disadvantages of a FICO auto score

If you’ve fallen behind on auto payments, your FICO auto score could be low. If this is the case, you may have trouble qualifying for an auto loan or could potentially pay a higher interest rate. 

Just a Number You Can Control 

Your FICO auto score is one aspect of your financial health and can impact your ability to get an auto loan. Your credit report updates every 30 days, so you’ve always got an opportunity to make some changes and improve your FICO auto score.

FAQ

What is rental history?

Rental history shows how reliable you can be as a tenant. It is similar to how your credit score reveals your borrowing and repayment history. Landlords typically seek to rent to tenants with a history of paying rent on time. A positive rental history helps reduce a landlord’s risk and makes them more comfortable approving your application. 

Why is rental history important?

Rental history helps landlords determine the quality of prospective tenants so they can try to prevent bad experiences, including renting to tenants who don’t pay their rent or damage property. It is time-consuming and costly to evict a tenant, and landlords try to avoid renting to tenants who behave irresponsibly. Strong rental history could make you more appealing and possibly get more favorable rental term offers.

Landing your first rental with no rental history

It is possible to land a rental unit even if you have no rental history. You can use several strategies to help land your first rental with no rental history.

Build your credit

If you have no rental history, landlords may focus on your credit history. Raising your credit score may make your application look more appealing to landlords. One of the  ways to help increase your credit score is to make on-time payments for all your bills.

Applicants with low credit scores can help raise them with a credit builder loan. Credit builder loans are offered at most financial institutions and are a great way to help boost your credit. You apply for a small loan amount, typically no more than $1,000. Some credit builder loans will not do a credit check, which is helpful if you have no or poor credit. 

Resolve credit history issues

Your payment history accounts for a large portion of your credit score. Debt could hurt your credit score if you fall behind on payments. Raising your credit score before applying may put you in a better position to get accepted for a rental. In addition, you should think about paying off any outstanding credit card debt and establish a budget to avoid future debt.

Find a flexible landlord

Some landlords have more relaxed requirements than others. For example, larger apartment complexes often have stricter requirements, but you may find more flexibility in a privately owned rental. 

A real estate agent may be able to help you navigate available choices and find a landlord that is right for your situation. Flexibility with square footage and amenities could also expand your pool of potential landlords. 

Get reputable sources as your references

Landlords may ask for references before giving you the keys. While some landlords like to hear from other landlords, that’s impossible if you have no rental history. Getting reputable sources as references is an excellent way to strengthen your case. 

Applicants with no rental history could ask their boss or manager for a personal reference letter. You can include this letter in your rental application to help increase your chances of getting a unit.

Provide supporting documentation 

Landlords may ask for supporting documents to better understand how you might manage the rent payments. You might be asked to submit documents like these with your application:

• Proof of income
• References
• Credit reports
• Bank statements
• Employer verification

Each document highlights what landlords typically look for, such as your ability to make payments and your payment history. These items can give your future landlord an idea of your payment history and insight into how you make your payments. 

Find a cosigner

Cosigners — in the form of a roommate or another willing relative or friend — could help you get a rental unit. You can leverage the cosigner’s credit and rental history to help get approved for a rental unit. Landlords may feel more comfortable with a high-credit cosigner. That’s because the cosigner is also responsible for rent payments if you can’t keep up. The cosigner doesn’t typically benefit from this deal but incurs the risk if you fail to make payments. However, if you know someone who is willing to co-sign, it can make it easier to rent a place with no rental history.  

Get a roommate

You can join forces with a friend and become roommates. Submitting applications together may improve your chances if you and your roommate each provide a source of income. Two incomes could help reduce the risk of falling behind. You can ask friends if they want to live with you for a few months or years in your desired location. Aspiring tenants can browse roommate-finding sites such as Roommates.com or Roomster to get help. It’s a nice bonus if your roommate has a good rental history.

Pay more upfront

Landlords typically want to lower their risk with every tenant. Paying several months of rent upfront could show them you’re serious about paying rent on time. You could save enough money to cover 3 to 6 months of rent. Paying for 3 to 6 months of rent upfront allows you to accumulate more funds before the next payment.

Renting without rental history 

Though it might seem intimidating at first, renting without rental history is possible. Make sure your credit is good and present as many positive references as you can find. Consider using a private landlord as opposed to larger companies until you can demonstrate a positive rental history. 

FAQ

Why Your Credit Score Dropped

From missed payments to maxed-out credit cards, there are a number of reasons you may see your credit score plummet 100 points fast. It’s sometimes easy to overlook the impact just one late payment can have on your overall score. Even the smallest mistake can have lasting credit consequences. Take a closer look at some of those reasons below. 

Missed Payment

One of the biggest reasons for a credit score drop is a missed or late payment. If you have perfect credit and hit a financial roadblock, a 30-day late payment can drop your credit score by up to 100 points.

Typically, creditors won’t report a late payment until it’s at least 30 days late. Once a missed or late payment is reported, expect to see a mark on your credit report for up to seven years. 

New Credit

The age of your credit accounts for 15% of your credit score. A longer, established credit history shows lenders you’re reliable, but new credit hasn’t had a chance to build a positive payment history. When you open a new credit account, it lowers the overall age of your credit. 

In addition to the age of credit, opening up any new credit account generally requires a hard inquiry, which could ding your credit score a few points temporarily. After about two years, the inquiry should drop off.

Although it’s good to have a credit mix, you shouldn’t apply for too many lines at once. Too many inquiries of different credit types indicate financial stress and could raise a red flag for creditors. Stay on top of payments and aim to keep your credit utilization below 30% on your overall credit file.

Closed Credit Card

Being debt-free is an accomplishment — but think twice about closing a credit card if you have a $0 balance. Closing the account will raise your utilization ratio because you won’t have that amount of available credit any longer. If you’ve had the card for a while, closing this line of credit can decrease your credit age, too.

Help avoid this by paying down balances or asking for a credit limit increase.

Thinking debt consolidation might be your solution? Check out these four ways to safely consolidate your credit card debt with little or no damage to your credit.

Paid Off Loans

Although this seems backward, paying off any form of credit could lower your credit score a bit temporarily. This is because paying off loans like auto, home or student loans will typically close your account with the creditor. If you close accounts your credit mix (10% of your score) and credit age (15% of your score) might decrease.

Don’t let a few point deductions in your credit score deter you from paying off loans though. The credit decrease is normally just a few points and typically climbs back up within a few months.  

High Balance

The higher the balance, the greater your credit utilization ratio is and less credit availability. Card issuers report your balance every month, and this makes up 30% of your credit score. To calculate your ratio, divide your credit card balance by your credit card limit and multiply by 100 to view as a percent. 

Example: 

Credit Card Limit: $1,000

Credit Card Balance: $758

$758 ÷ $1000  = 0.758

Move the decimal point 2 places back, and you will have your credit utilization rate.

0.758 X 100 = 75.8 

Add the percentage sign and you have your credit card balance ratio. In this example, the ratio is 75.8%.

An easy way to reduce this ratio if you have an average or above score, is by asking for a credit increase on your credit cards. Keep in mind, asking for a credit increase may require a hard credit pull which can knock a 5 -10 points off your score. If you are able to justify the credit score decrease and you do not use the additional credit, you’ll automatically lower the ratio. 

Not available for a credit increase? Find a side gig to supplement your income and pay down your debts. Uber, DoorDash, and Instacart offer a flexible way to make extra cash that works around your schedule. 

Derogatory Mark

A derogatory mark on your credit score is when a creditor reports a delinquent or late payment. A few examples of derogatory marks that would negatively impact your credit are missed payments, collections accounts, repossession, and foreclosure.

Some negative marks on your report can remain for 7 to 10 years. If you’ve found a derogatory report that’s a mistake, you can file a dispute with the credit bureaus. 

Credit Limit Lowered

A credit card issuer can lower your credit limit at any time for any reason. If this has happened to you, these are the three main reasons why your credit limit was lowered:

• Card inactive or rarely used 
• High credit utilization 
• Missed or late payments

The credit card issuer can’t charge you over-the-limit fees or penalty fees until after 45 days of a limit decrease notification. Once you notice a credit limit decrease, work on paying balances down and on-time. 

After you’ve made timely progress, you could consider calling your credit card company and ask to increase the limit again. 

Victim of Identity Theft

Falling victim to identity theft happens more often than you might think. Regular credit monitoring, locking credit, and freezing credit can help safeguard any sensitive personal information and give immediate information to dispute possible data breaches. 

How Can You Recover?

Helping to restore your credit after a plummet is possible for  Credit Builder Plus members with MoneyLion. Members get access to a Credit Builder loan and other benefits like user-friendly budgeting tools and weekly reports about your credit— all while helping more than half our members raise their score by up to 27 points within 60 days!

Dips are normal 

Credit scores fluctuate. While it’s upsetting to see your score drop drastically, it doesn’t mean it has to stay down. If you continue to pay your bills on time, keep your utilization low, monitor your credit report regularly, and avoid opening too many accounts, you’ll should see your score increase. It may take a little while, but good credit habits can last a lifetime. 

Is a 705 credit score good?

Yes, according to all three credit bureaus, a credit score of 705 is in the good range. It demonstrates to lenders that you are not high risk and have demonstrated your ability to repay loans or lines of credit. A credit score of 705 won’t limit your opportunities for credit cards, auto loans or mortgages. However, you might have difficulty qualifying for business loans. 

With a 705 credit score, you still have the opportunity to raise it higher. With the tips below, including automated payments and rent reporting, you could boost your credit score in a few months. 

What a 705 credit score will get you

According to all three credit bureau rating systems, a 705 FICO score is in the “good” range. A 705 credit score is usually good enough for people to qualify for lower interest rates on loans, home mortgages, and car loans. However, you may not qualify for the lowest interest rates and could still have some difficulty getting approved for commercial or business financing.

Credit card with perks 

A 705 credit score is good enough to qualify for most credit cards. Some lenders may consider income, payment history and the number of other credit cards you’ve applied for when making approval decisions. With a 705 score, you may get a higher interest rate, but as long as you pay off the card in full, that won’t matter.

A credit score of 705 is in the “good” score range, so you can expect to get approved for most rewards cards. That’s great news because it means you qualify for all kinds of perks. Credit card companies offer signup bonuses, introductory zero annual fees, 0% financing, or zero foreign fees for those who have higher credit scores. A 705 credit score credit card can offer benefits like credit card points to get free flights, free hotel nights, or cashback rewards of $100 to $500 or more. 

But just because you’re approved for a great credit card with perks doesn’t mean you can’t have fees applied to your account if you forget to make on-time payments. In addition to fees, you’ll have a high credit card interest rate adding significant costs. Pay the card on time, in full each month for credit card perks to be a reward!

Mortgage

A mortgage loan with a 705 credit score is certainly possible. A 705 credit score is high enough to qualify for most home mortgages. But having a good credit score isn’t the only factor used to approve you for a home loan. Most lenders will only approve you for a loan equal to one-third of your after-tax income. They’ll also consider your income, employment history, on-time payment history, the amount of debt you have, and other score details when deciding whether to approve you for a loan. 

Better auto loan rate

Auto lenders typically offer better interest rates if you have a 740 or 799 credit score. However, a 705 credit score is considered enough to qualify for most lenders, so you can still expect to get a decent interest rate as long as the rest of your credit portfolio and income looks solid. If you can wait six months and work to raise your credit score, the interest savings on an auto loan can be worth it. 

Reduced auto insurance rates in some states

Some insurance companies use your credit score to determine your rate or provide a discount. If you have a 705 credit score, you might be eligible to receive reduced auto insurance through these programs.This is not a guarantee in all states, so it’s essential to check whether your local lenders offer any discounts for 705 credit score holders.

Personal loan

Most 705 credit score holders can qualify for a personal loan, but it’s likely your interest rates will still be sky-high. While 705 is a decent score, you’ll need excellent credit scores to receive the best interest rates on a personal loan. A credit-builder loan can help you build a very good credit history faster.

Rent a home or apartment 

Your 705 credit score will help you qualify for a rental home or apartment. Some landlords require a credit score of 740 or higher, but most will be happy with 700-plus. The landlord will still usually require references to ensure you’re a solid candidate. And in most cases, you’ll need to put down the first and last month’s rent as well as a security deposit before moving in. That is normal procedure regardless of credit score. 

Lease a car 

Your credit score is one of several factors that car companies will look at before approving you for a lease agreement. A 705 credit score is respectable enough to get approved, and if your job and income check out, you’ll likely be able to get a decent deal on your next new ride.

8 tips to raise your 705 credit score 

Is a credit score of 705 good? Yes! Could you raise it to a credit score of 711 or even 770? Also yes. While 705 is considered a good credit score, raising it could ensure that you’re receiving the best possible rates on any financial products you use. Here are a few ways to increase your 705 credit score in both the short and long term:

1. On-time payments

Always try to ensure that you’re paying all of your bills on time. The single most effective way to raise your 705 credit score is to make on-time payments. Late payments and missed payments will lower your credit score. Paying on time will also ensure you avoid fees and penalties for late or missed payments.

To never miss a payment again, set up automatic payments for the minimum payment due on all your credit cards. Then, try to pay all credit cards in full each month! If you need help with payments, call up the company directly to set up a way to pay. 

2. Monitor credit score regularly

Consistently monitoring your credit score is an easy way to see how you’re doing and identify ways in which you can improve your credit. The government gives you the right to free credit reports. 

You can access free credit reports from all three credit bureaus at annualcreditreport.com. Be sure to check for any inaccuracies and correct them or file a complaint to protect your credit score and identity.

3. Keep old accounts open 

Did you know that closing your old accounts could make your credit score drop by a significant number of points? Make sure to keep your accounts open to avoid a plummeting credit score, especially your oldest credit account. 

4. Report rent and utility payments

If you’re a renter or someone who pays their bills via check, make sure you report all your rent and utility payments to the credit bureaus. These types of payments can add up quickly and help raise your score. A rent reporting company can report up to two years of past on-time monthly rent and utility payments. 

5. Request credit limit increase 

An easy way to increase your credit score is to ensure that you regularly request credit limit increases. To do this, call your credit card company to see whether they can offer any credit limit increases. Some credit cards, like those from Bank of America, allow you to request a credit increase online. You can do this as often as you want until they offer a limit increase. 

6. Pay off credit cards 

Paying off existing debt is an important step to improving your credit score. You can use any strategy that works for you, but the goal is to reduce total debt as much as possible. 

If you have several credit cards with high limits, the next step is to pay down your maxed-out credit cards so that you can lower your overall credit utilization. This will ensure that your credit score stays in good standing. 

7. Avoid hard pulls

One of the best ways to raise your credit score is to avoid hard pulls on your credit reports. A hard pull, otherwise known as a hard inquiry or hard check, occurs when a creditor attempts to look at your complete file or any part of it from one or more of the three major credit bureaus. 

This happens when you apply for a loan or a new credit card. Some loans or credit cards advertise that they don’t do a hard pull, otherwise assume every new application for a financial product includes a hard pull. 

How soon you can see a 740+ credit score

First, congrats on already having a good credit score. A 705 shows you’ve established some great credit management habits. By systematically applying the tips above, you should be able to achieve a credit score of 740 or higher. 

Whether that takes months or years will depend on how quickly you can pay off total credit card debt, how long you’ve been making on-time payments, and whether you were able to get credit for rent and utility payments. 

If you want to boost your credit score even faster, consider asking a friend or family member to add you as an authorized user on one of their credit lines. Onward and upward for even lower interest rates and better financial opportunities.

FAQ

Disclosures

MoneyLion Pay Later loans issued by WebBank. A soft credit pull will be conducted which has no impact on your credit score. MoneyLion Pay Later loans have an annual percentage rate (APR) ranging from 19.99% – 35.99%. Terms and conditions apply.

Although there is no standard minimum credit score needed for renting a house, you’ll generally have the best approval odds if you have a decent credit score. 

What is the minimum credit score needed to rent a house?

The minimum credit score needed for renting a house varies from landlord to landlord. Generally, most landlords require applicants to have a credit score of at least 620 to be considered for rental housing. This means that if your FICO score is lower than 620, you may be denied an application or asked for additional security deposits or co-signers before being approved. Some landlords may also consider applicants with lower scores depending on other factors such as employment status, income level, and debt-to-income ratio (DTI). It’s important to know what other criteria your potential landlord requires along with the minimum credit score needed for renting a house before applying for rental housing. 

How does a credit score affect renting a house?

A credit score often plays a significant role in renting a house as it indicates a tenant’s financial reliability and responsibility. Landlords and property managers use credit scores as a screening tool to assess a tenant’s ability to pay rent on time and take care of the property. After all, renting is a risk. 

The higher your credit score, the better your chances of being accepted by landlords.

Payment history

Having a good payment history builds credibility with landlords and shows that you take your financial responsibilities seriously. Maintaining a solid payment record shows that you can manage money well and be trusted to pay rent on time. If a landlord looks at an applicant’s credit report and sees numerous late payments or high levels of debt, they may think twice about approving the application. 

Credit utilization ratio

Credit utilization refers to the ratio between the amount of available credit a person has and how much they are using. A high credit utilization ratio — more than 30% of total available credit being used— can signal to landlords that the applicant is relying too heavily on debt and may be at risk of defaulting on their obligations. A low credit utilization ratio (less than 30%) shows that an individual is managing their debt responsibly and could be seen as more reliable by landlords.

Length of credit history

In terms of credit, a longer credit history means you’re more reliable. You’ve had more time to establish good spending and money management patterns. When applying for a rental home, a longer track record can indicate that the applicant is financially responsible, pays bills on time, and uses debt responsibly. Because credit score calculations often account for age, having a longer history may mean a higher score.

Types of accounts

A well-rounded credit mix of various types of accounts is seen by most lenders as a sign that a person is a responsible borrower. 

If you have no credit or only one type of credit, such as a student loan or an auto loan, this lack of diversity in your credit report may cause some landlords to question your ability to manage multiple payments.

New credit inquiries

Multiple inquiries within a short period of time can signal to credit reporting agencies that the applicant is seeking credit or attempting to take on new debt, which can lower their credit score.

This is why inquiries on a rental application are generally viewed as a negative factor.

Landlords and property managers tend to prefer tenants who have a stable credit history with few inquiries, as this can indicate that they don’t have a history of taking on more debt than they can handle.

Other important considerations when renting a house

Credit is important, but it’s only one factor in the application. When you’re preparing to apply for a rental property, there are some other important things you’ll want to take into consideration and ensure are in order. 

Previous landlords and rental history

Previous landlords can provide information about the tenant’s capability to pay rent on time, their ability to maintain a residence responsibly, and any potential issues that may have arisen during their tenancy.

If you’ve been evicted, this is a major red flag for future landlords. An eviction can remain on your public record for seven years. It’s important for tenants to be honest on their rental application and provide accurate information to landlords and property managers. This can help establish trust and build a positive relationship throughout the rental process. Even if you’ve had issues in the past, don’t try to cover them up. Let the landlord know and explain how circumstances have changed. 

Income 

Landlords often want tenants to make at least three times the rent. If the monthly rent for a property is $1,500, a tenant should have a gross monthly income of at least $4,500. However, requirements can vary depending on the region you live in. As a rule, a tenant should not spend more than 30% of their gross income on rent in order to maintain financial stability and have enough money left over for other living expenses.

In addition to verifying that applicants meet certain income criteria, landlords may also want to make sure that they have sufficient funds available in case of an emergency such as job loss or illness. This ensures that applicants will be able to cover any unexpected costs during their stay at the rental property.

Having higher levels of income can help mitigate any negative effects of poor credit on a rental application.

Financial documents and bank statements

Proof of assets can include bank statements, tax returns, pay stubs, or other forms of documentation that demonstrate your income and savings. These documents provide landlords with an indication of your current financial standing. If you have a savings account with enough money to cover a few months of rent, it can help increase your approval odds. The more assurance you can provide to show the landlord you’re able to pay, the better. 

References

References give landlords a deeper understanding of who you are as a person, beyond the documents and credit score. 

When creating your list of references, make sure they are people who know you well and can attest to your character and work ethic. It’s important for these people to have had direct contact with you in some capacity, like as an employer or teacher. If you’ve been a tenant in the past, having a current or previous landlord as a reference can be extremely beneficial. You should also provide information about how long each reference has known you and in what capacity. 

Make sure to include your references’ full names, phone numbers, addresses, and email addresses (if applicable). Most landlords will call references during the application process so have them ready for when the time comes. 

Obtain a guarantor if needed

If you have less-than-ideal credit, renting isn’t necessarily impossible. A guarantor, who is typically a family member or friend of the tenant who acts as a guarantor on the lease agreement, can help you qualify. The guarantor must meet certain criteria to guarantee the tenant’s rental obligations. They must be over 18 years old, have a good credit score, and own their own home. 

The guarantor is not only responsible for ensuring that rent is paid on time, they are also responsible for any damages caused by the tenant during occupancy. In some cases, the grantor will even pay for some of the tenant’s security deposit in order to get them successfully approved for a rental. 

Prove your financially stable 

You should aim for a minimum credit score of at least 620 before you apply for a rental home. If you don’t meet the credit criteria, a high income and proof of finances can show the landlord you’re stable and can afford the rent. No landlord wants to go through the process of evicting a tenant, so it’s important to prove yourself as a worthy tenant if you want to get approved. 

FAQ

When paying late is really too late

One of the worst ramifications of not paying your bills on time is having it negatively impact your credit score. If your score goes down, future attempts to get credit or loans, including mortgages and car loans and apartment rentals, become much harder. You’ll likely end up with fewer lender options and a higher interest rate for borrowing. 

Housing and utility bills

Not all bills are created equal. As a general rule, the history of many bills, like rent and utility payments, are not reported to credit bureaus. In other words, your score likely doesn’t get any help from paying on time, but it’s also likely you won’t get dinged if you’re late.

But that doesn’t mean you can stay delinquent forever. The longer you don’t pay one of these bills — often after a second and third notice — your landlord or utility company will likely turn over your overdue account for collections. Never mind the fact that collections calls are annoying and depressing, your credit score will get dinged once you get turned over to collections. Having an account in collections can hurt your credit standing even after you pay off your debt in full.

Credit cards and loans

With loans and credit card bills, your payment history is regularly reported to the major credit bureaus. Most lenders report missed payments after 30 days so if your payment is only slightly overdue (29 days), chances are it won’t show up on your credit report. 

Once the major credit bureaus are notified (after 30 days), a late payment can stay on your credit report for seven years. Payment history accounts for more than one-third of your credit score, meaning a series of late payments could turn a good credit score into a bad one very quickly.

The good news is that if you take action quickly and catch up with all missed payments within two months or less, chances are it won’t have too much of an impact on your credit score in the long run. 

Payments that are 60 days past due can cause significant damage to your score. The impact increases the longer you go without making a payment. Eventually, the debt goes to collections. 

In addition to the damaging credit consequences, credit card companies will still often charge you a late fee of about $35 if your payment isn’t on time. And you can rack up additional late fees if you miss more due dates. Ouch!

If your late payments multiply, you also risk seeing your interest rate rise. For example, a penalty rate on a credit card can climb to as high as a 30% annual percentage rate (APR), which will immediately increase your monthly finance charge. If you miss a payment on a zero-percent teaser rate card, chances are you’ll forfeit that promotional rate and get moved up to the default interest rate.

Sometimes your credit report includes errors that bring your score down. Getting rid of errors or misleading information on your credit report is one of the best ways to improve your credit score. You can check your credit report by requesting a copy from each of the major credit bureaus — Equifax, Experian, or TransUnion — through the government-recommended site annualcreditreport.com or through a third-party credit monitoring site. 

If you see errors or discrepancies, you’ll want to dispute them with each bureau. Once you file the dispute, the bureau must investigate. If there are errors or the creditor fails to respond, the debt is removed from your credit report.

Benefits of paying on time

Paying your bills on time is essential to maintaining a good financial record. From credit cards to loans, paying your bills on time can help you build and maintain a strong credit score and save you money in the long run.

Even if you have only missed one bill payment, it may still prevent you from getting approved for future loan applications with favorable interest rates. Making timely payments helps keep these costs down while also helping protect your overall financial health. 

If you’ve got bills to pay, make sure to pay them on time every month — not just for larger loans or credit cards but for all of your expenses. By doing this, you will be building a strong track record of timely payments that will reflect positively in your credit score. 

But what if the money just isn’t there? Prioritize which debts get paid first — not all debts are created equal when it comes to their impact on your credit score. For example, paying off a medical bill typically has less impact on your overall score than paying off an overdue mortgage or auto loan would have so pay those obligations first. 

What to do when you’re late on a payment

When you’re late on a payment, it’s important to take steps to get back on track as soon as possible. The sooner you take action, the better off you’ll be.

Pay your bill as soon as possible

Paying the bill is the first step — it’s best to do this as quickly as you can. If your funds are limited and you can’t pay in full, make a partial payment to start with and then follow up with another payment once you have more money available.

Request to waive any late fees

Once your payment has been made, contact the lender and ask whether they would consider waiving any late fees that have been charged. Some lenders may be willing to work with customers who have encountered financial difficulty by providing leniency on late fees or making alternative payment arrangements. 

Get back into on-time payments

Remain proactive and take steps toward getting back on track as soon as possible. Don’t let a bad month get you down. Once you’ve made sure all of your payments are up to date and accounted for, set a reminder in your calendar or phone so that future payments don’t slip through the cracks again. 

If you’re experiencing financial hardship, don’t ignore your debts. It’s always better to discuss your concerns with your lender or creditor before you fall too far behind. 

Monitor your accounts

You’ll want to double-check that all of your other bills are up to date and that you’re staying within your financial limits. Depending on how much you owe, you might need to make some changes to reduce costs in another area in order to cover the bills each month.

Keep an eye on your credit score

It’s also important to keep an eye on your credit score so that any changes are immediately apparent. Unpaid bills or late payments can have a negative effect on your credit score, but having an accurate understanding of where your score stands will help ensure that any issues are resolved in a timely manner. 

Bouncing Back

No one wants to be late with their payments but sometimes we find ourselves in situations where we just can’t make ends meet in time for our bills’ due dates. There are steps we can take to mitigate any potential fallout from missing those important deadlines — including understanding potential penalties associated with different types of loans and prioritizing which obligations should be taken care of first given our current financial circumstances. It’s also important to remember that taking action quickly can help minimize any lasting damage done by overdue payments — so don’t waste any time getting back into good standing with creditors!

FAQ

That depends. Many other countries have some form of credit score or mean to assess creditworthiness. But as you’ll see below, systems vary between countries that use credit scores. Whether credit score information can be shared across international borders also varies. Find out more below. 

When did credit score tracking begin?

In 1970, the Fair Credit Reporting Act passed in the U.S. and created a regulated system that tracked what information would be collected, for how long, what exactly was reported, and how to obtain copies of your credit report. It wasn’t until 1989 that the first general-purpose Fair Isaac Corp. (FICO) score was created.

What countries have credit scores?

Countries around the world including Canada, the U.K., Spain, China, and Japan use credit scoring systems. Not all countries that use credit scores have systems like the U.S.  Some only track negative marks like late or missed payments, while others track total debt or debt history. Below we’ve compiled a list of a few major countries and their unique credit scoring systems.

Germany

Germany is one of the countries that uses credit scores, but there is only one credit bureau. It’s called the Schutzgemeinschaft für allgemeine Kreditsicherung, or SCHUFA for short. SCHUFA is a private enterprise known for fair credit-building steps to ensure you start on the right foot.  

The company works much like a U.S. lender, tracking loan activity, open accounts, unpaid balances and fines. Unlike U.S. systems, with SCHUFA, every citizen begins with 100, and the score slowly diminishes as you borrow more money. A score of 90 is considered above average with the SCHUFA system. The top credit tier starts at 97.5. 

Canada

Canada’s credit scoring system is the most similar to the U.S. It operates through Equifax Canada and TransUnion Canada. Much like the U.S., each creditor keeps track of payment history, age of accounts, and credit utilization. Based on your track record, you will receive a score between 300 and 900. 680 is considered an above-average and can help you qualify for a loan with a lower interest rate.

Japan

Japan has three credit bureaus: Association’s Personal Credit Information Center, the Japan Credit Information Reference Center Corp. (JICC), and the Credit Information Center Corp. (CIC). Unlike other countries on this list, Japan doesn’t issue credit scores. But it does track information like account terms and payment history.

In Japan, having a healthy relationship with your bank is more important than a specific credit score. As a Japanese citizen, maintaining a responsible relationship with your bank and your employer should be enough to get credit approval. The bank is responsible for taking into account details about employment history, salary, and history at the bank.  

Non-Japanese citizens or newcomers to the country could encounter more difficulties because of the lack of Japanese credit bureau data for them to pull from.

United Kingdom

Of countries that use credit scores, the U.K. is one of the most similar to the U.S. If you’re planning a move to the U.K., the names of these three credit agencies should ring a bell.  Experian, Equifax, and TransUnion (previously called Callcredit) work in the U.K. much as they do in the U.S. The only difference is the scoring ranges. In the U.K., Experian credit scores range from 0 to 999, while TransUnion goes from 0 to 710, and Equifax goes from 0 to 700. 

To earn a line of credit or qualify for a mortgage, you must show good standing in payment history, credit utilization, and age of accounts. As a bonus incentive, the U.K. offers a boost to your credit score if you register on its Electoral Roll.

Spain

In Spain, credit history is tracked in its risk-management center, Central de Información de Riesgos del Banco de España (CIRBE). To receive any type of credit, the CIRBE must first complete a credit check to highlight any past payments or current debts. The CIRBE only tracks negative points, like unpaid debt. It can stay on your record for up to six years until the debt is cleared.  

Unlike other countries that use credit scores, CIR information is only available to financial institutions, not to consumers. If you’re considering applying for a loan, make sure you bring the information about your credit report from your home country. Most Spanish loan approvals for non-Spanish citizens require a 30% downpayment and proof of income.   

Australia

Up until 2014, Australia only reported negative marks. As of 2021, there are four credit reporting agencies, Equifax, Dun and Bradstreet, Experian, and the Tasmanian Collection Service. This new credit reporting system — similar to the U.S. — allows lenders to make a more balanced assessment of a borrower’s likelihood of repayment based on their history and current accounts. 

To determine your credit score they collect the following: credit file age, type of credit, amount you’ve applied, negative marks, court judgments or defaults, payment history, and open and closed accounts. 

Is my credit score useful anywhere in the world?

Even though many countries use credit scores, there is no international credit scoring system. If you want to apply for credit or a loan internationally, you can bring a copy of your U.S. credit report, although lenders may choose to disregard it. To apply for credit overseas, you’ll need proof of income or assets. In some cases, you may be asked for rental history, and referrals from the U.S. could help your case.

Is there an international credit report for individuals?

There is no international credit report for individuals. Countries that use credit scores each have their system. Credit scores built in the U.S. are only valid within its borders. Because of international privacy laws, credit scores are not shared between countries. However, if you get residence or citizenship in another country that uses a credit score system, you can establish a credit score in multiple countries. 

Can I build credit abroad? 

Yes, you can build credit abroad, but this depends on the credit scoring system of your adopted country and whether you have the appropriate identification to be considered for credit in the country. Usually, you’ll start as a brand-new credit file. In countries that only track negative marks, this won’t hurt you. But in countries that build credit on length of credit and on-time payments, you’ll need to build credit history over time.  

As a possible alternative, Equifax operates in 15 countries across Europe and Latin America and may allow you to transfer some credit score information. You can check Equifax International Credit Reports. You must know the local laws because there are laws in place that forbid sharing of credit information overseas.

Summary of what countries use credit scores

Countries that use credit scores include Japan, China, the U.K., Canada, Australia, Germany, and the Netherlands. While you cannot transfer your credit scores internationally, many of the principles of building a good credit score are the same in all countries. 

If you’ve built a good credit score in the U.S. and are moving to a country where Equifax operates, you may be able to carry that good credit score with you to the new country.

FAQ

Below are some of the best tips to start your teen on the path to lifelong good credit. 

How to start building credit early

If you want to give your child a financial head start, the five steps below can help your child establish credit and have a good credit score by the time they’re ready to rent their first apartment. 

Become an authorized user

Each credit card company has a different minimum age for someone to become an authorized user. This is often the first step someone can take to establish credit.

By becoming authorized users, teens start to learn responsibility. However, if your credit score is low, it’s worth building it up before adding your child as an authorized user. 

Keep in mind that if you give the authorized user access to a credit card, you’ll be responsible for paying off any charges they make. For this reason, it’s important to teach good habits like spending less than you earn before giving the authorized user access to a card. 

Apply for a secured credit card

With a secured credit card, you deposit funds first, and those are used against the card’s credit limit. It is a low-risk way to establish a credit history and build responsible spending habits. The higher the deposit, the higher the credit limit. You can get a secured credit card with as little as $200 to $300 deposited. Many banks also allow users to get a secured credit card against a savings account or credit union account. 

Consider a student credit card

A student credit card is designed to help college students establish credit. Some student credit cards offer rewards like cash back or student-centric benefits to give college students a bit more each month. For a student credit card, students will need to be at least 18 and have a Social Security number. Many will also need a co-signer, although some student credit cards allow people with low or no credit to qualify as long as they have adequate proof of income. 

Look into credit-builder loans

Credit-builder loans can be a way to establish a credit history faster. With a credit-builder loan, the lender deposits the loan amount into a savings account or certificate of deposit (CD). You can only access the funds when you’ve repaid the full loan amount. It’s a no-risk way for lenders to help you build a credit history. 

Explore safe 0% APR cash advances

Some credit cards or online banks offer short-term 0% annual percentage rate (APR) cash advances that can be used to build credit history or establish credit. Do your research before taking out a 0% APR cash advance, as hidden fees can add up. Usually, you can establish credit at 18 using a 0% APR cash advance. 

Top credit-building tips

Once you’ve got a credit card, credit-building loan, or another way to build credit history, it’s important to plan accordingly to avoid building bad credit. For that, it’s important to know what banks look for and plan to meet their criteria each month. 

Make timely payments

On-time payments make up 35% of your credit score. Whether it’s your first credit card or a loan, 100% on-time payments will go a long way toward building good credit history. If you can’t pay off the full amount, make sure you pay at least the minimum due before the payment due date. A single late payment can affect your credit score for seven years, so be sure to stay on top of it.

Understand how credit works

In addition to on-time payments, there are five factors that affect your credit score in varying percentages:

• 35% payment history
• 30% amount owed (debt)
• 15% length of credit history
• 10% number of new credit lines
• 10% credit mix (revolving, installment and open credit)

For each of these, there are actions you can take to help or harm your credit score:

• For payment history, pay all accounts on time every month.
• For the amount owed, ideally, pay off all credit cards every month in full, or keep the debt below 30% of available credit. 
• For the length of credit history, the longer the better. Consider becoming an authorized user on the account of a relative or friend with 20-plus years of credit history and a good credit score.
• For the number of new credit lines, don’t apply for many credit cards or loans at once. Consider only applying for one or two credit cards or loans every six months.
• For credit mix, a credit card and a credit-builder loan are two different types of credit that will represent a good credit mix. If you have student loans or an auto loan and a credit card, that will also usually be enough for a good credit mix. 

Keep these tips in mind, and you’ll start building up your credit score reliably. 

Avoid overspending

One of the most important things to remember as you’re establishing credit is that it is borrowed money. Never borrow more than you have. While it can seem virtual, it can have very real impacts on your financial future, from interest rates on a mortgage to the ability to get an auto loan. 

If you’ve got a budget of $200 per month for credit card expenses, don’t spend more than $200. Borrowed money is never free, and you’ll end up paying a lot in interest if you don’t pay off the full amount.

Monitor your credit reports

While building credit, it’s important to monitor your credit report to make sure there isn’t any incorrect or missing information on it. You’re entitled to a free online credit report every year from the main credit bureaus: Experian, TransUnion, and Equifax. If you find missing or incorrect information, you can contact the credit bureaus or file a dispute.

Request a higher credit limit

If you have the income to charge more on a credit card, requesting a higher credit limit can improve your credit score by lowering credit utilization. After six months of paying bills on time, you can request a credit increase. If you establish credit at 18, you’ll be able to request a credit line increase after six months and may see an improved credit score. Here’s an example: 

If you have a credit limit of $1,000 and spend $500 each month, your credit utilization is 50%. If you request a credit limit increase and are approved for a credit limit of $3,000 and still spend $500 a month, your credit utilization decreases to an optimal level of 16.6%.

Final thoughts on what age should you start building credit

Because 15% of credit history is based on the length of time with credit, establishing a credit history early has distinct advantages. A teenager as young as age 13 can establish credit by becoming an authorized user. But before rushing to add a 13-year-old as an authorized user, it’s important to help them build responsible credit habits. 

It’s never too early to start building good credit habits You can teach young children the basics of savings and earning money. By the time they’re teens, they could use a credit card to pay for some of their activities or clothes and learn to manage a budget. Just be sure to remember the basics, pay the card on time each month, and don’t spend more than you have.

FAQ