Question of the Day: How long does it take to establish your first credit score?
They say good things come to those who wait. But for how long?
Answer: About 6 months
- Why do you think credit reporting agencies want you to have six months of credit history in order to give you a score?
- After your first six months of managing credit, how do you think your ability to borrow money would compare to someone with years of credit history?
- What are some good habits you would practice in order to make sure you improve your credit score once it’s established?
Behind the numbers (from Discover):
"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."
Here's a teacher (and student) favorite activity in the Managing Credit unit, Interactive: FICO Score Simulation, where students will have opportunity to see what factors impact a credit score.