How to Start Building Credit at 18

November 11, 2021
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Being an adult is expensive. The older you get, the more living costs and expenses you’re going to find yourself responsible for paying every week. It all adds up pretty quickly.

That’s why almost half of adults in the U.S. have a credit card. When a lender or credit card company is willing to extend credit to you, it can be a major lifesaver for dealing with unexpected expenses — as long as you handle your credit responsibly.

Having credit and using it responsibly also means lenders are more likely to let you borrow money for a loan. Utility providers also often look at your credit before offering you their services.

Unfortunately, building credit can take a lot of time — and if you’re only 18 and haven’t had any credit before, you’re starting from scratch.

This guide explains what a credit score is, what credit score 18-year-olds start with, and how you can build credit at 18.

Step One: Understand How Your Credit Score Works

Before we dive into how you can start building credit as a teenager, we’ve first got to talk about how your credit is assessed. 

It’s all done through your credit score.

A credit score is a representative number that demonstrates your ability to repay funds that you’ve borrowed. Credit scores range from 300 to 850. The higher your score is, the more attractive you’re going to be to potential lenders. That means it’s safe to extend credit to you or let you borrow money.

As a point of reference, in 2020, the average credit score in the U.S. was 711.

Table showing average FICO score over last 10 years
(Image source)


The credit score model was created by a group called the Fair Isaac Corporation (FICO), so the most common type of credit rating is called a FICO score. Three major credit agencies operate in the U.S.: Experian, Equifax, and Transunion.

They’re the ones responsible for looking at your credit history to formulate your score. That credit information from a credit bureau is then provided to lenders, credit providers, or utility companies so they can make an informed decision about whether to give you a credit line.

The better your score, the more likely you are to be approved for a credit card, car loan, personal loan, or other types of service agreements. You may also benefit from higher borrowing amounts, good credit limits, or a better interest rate.

Your credit history is based on a pretty wide range of factors, including the number of bank accounts you have, your current debt levels, and your payment history of those debts.

What credit score do 18-year-olds start with?

When you turn 18, you’re an adult in the eyes of the law. This means you can apply to companies or lenders for credit. But, if you want to maximize your chances of getting approved, you’re going to need to have a decent credit score with a credit history. 

Unfortunately, if you have no credit account activity, you’re starting from scratch.

It’s important to note that starting with no credit score doesn't mean your score is zero — it means your credit score doesn’t exist. 

Your score will only start getting calculated when a lender or credit card issuer requests your score for the first time. 

Illustration of woman drawing line graph


When you open your first credit account, it can take up to six months’ worth of transactional activity before that account can be used to calculate a credit score.

After you’ve established an account or a line of credit, your first score will vary based on how responsibly you’ve been using that account. You might start with a FICO score of 300 (the lowest possible score) — but if you’ve been careful and haven’t abused your credit, chances are, your score will be much higher.

How to Start Building Credit at 18

Although it can be difficult to start building credit as a teenager, it is possible. There are plenty of strategies and opportunities you can use to kickstart your credit history and boost your score.

To help you get started, we’ll cover a few of the most successful ways you can start building credit.

1. Become an authorized user

Do you have a family member or trusted friend who’s already a credit card holder? If that person’s account is in good standing (meaning they pay all their bills on time), they might be allowed to add you to their account as an authorized user.

That means you’re allowed to use the credit account, too — although the account holder is still responsible for paying those bills. 

If the credit card company reports on authorized users, you’ll have all of the account’s on-time payments added to your credit report. The card issuer will be able to tell you whether they report on authorized users.

Infographic explaining how aithorized card accounts work
(Image source)


Just be careful. If you’re an authorized user and the cardholder doesn’t keep up with their bills, you can get a bad credit score. 

But if everyone is responsible, this can be an easy way to improve your credit at 18.

2. Establish a healthy credit mix

An important part of building credit is ensuring that you’ve got a decent credit mix. At 18, you should ideally be aiming for one type of revolving credit and one type of loan. You don’t need five credit cards and a personal loan. The more inquiries made on your credit history, the more it can dent your score.

In terms of getting loans at 18, you’ve got a couple of options.

The most popular loan type at this age is going to be a student loan. If you’ve already got a student loan that’s in your name, chances are you already have an installment loan on your credit history. 

This applies whether or not your parent or legal guardian acts as a cosigner or a guarantor. 

But just like any other type of debt, having student loans will only help you start building credit if you’re making your loan payments on time.

In other words, don’t miss a monthly payment, or your credit score will suffer.

Another popular loan type young people can pursue is a credit builder loan.

A credit builder loan works in the opposite way of a traditional loan. After applying to a lender and getting approved, your money is placed in a secured certificate of deposit. You’re then responsible for making monthly payments to your lender. At the end of your loan term, you’ll be given back your funds.

It’s really important to note that there are a lot of scammers out there offering credit-building loans. Large banks don’t tend to offer them. Credit-building loans can normally be found at a local credit union, community bank, or online lender. 

Just be sure to do your due diligence and make sure it’s legitimate.

In terms of getting a credit card, you’ve got a couple of options. We’ve already covered joining an account as an authorized user — but another option you could explore is to get a starter card.

You can't qualify for a traditional credit card if you’re under the age of 21. But you can often get a starter credit card at 18 if you have a cosigner or can demonstrate that you have sufficient income to make payments.

A starter card is a secured credit card that requires a minimum cash deposit. That deposit then becomes your credit limit. If you make a $400 deposit, that will be the card’s credit limit.

Infographic explaining what secured credit cards are.
(Image source)


If you decide to go for a low limit, you'll be less likely to overspend on your credit card. That maximizes your chances of making payments on time, which will strengthen your credit score no matter your age.

3. Pay your bills on time

This one sounds pretty straightforward, but it’s critical to bear in mind. 

Loans and credit card companies aren’t the only organizations that report to U.S. credit agencies. A lot of utility companies report on your credit history, too.

That’s why you’ve got to stay on top of any existing bills. 

The most common utility bills you’ll probably have at 18 include cell phone bills, Wi-Fi, gas, or electricity. If you’re paying bills like this on an account in your name, it will probably improve your credit score.

On the flip side, if you don’t have any accounts of this type, consider getting them. Your credit score will thank you.

Want your activity on these accounts to take your credit score even further? Make extra payments and set up recurring autopay features to make sure you never miss a payment.

Make sure you don’t miss any payments. And if you are going to miss a payment, make sure to get in touch with your utility provider immediately. Sometimes, companies can actually understand and give you an extension to pay your bill without hurting your credit score.

4. Your credit utilization matters

When it comes to building credit, utilization is key. As a general rule of thumb, experts recommend you try to use less than 30% of the credit that’s been made available to you.

For example, if you’ve got a credit card with a $1,000 spending limit, try not to let your balance go above $300. Not only does this maximize your chances of staying on top of your bills, but it also shows credit providers you’re spending responsibly.

This is why it can also boost your credit score if you can get a higher balance — it makes it easier to stay below that 30% mark (as long as you have self-restraint). 

So, instead of trying to take out more cards, try to stick with one card and increase your spending limit to improve your score. 

You can get in touch with your provider to request a limit increase, but many companies will automatically increase your balance limit after six months, as long as you’re in good standing.

5. When it comes to credit, age matters

The longer a good credit history spans, the more reliable you’re going to look as a borrower. That’s why you should do your best to set up a card as soon as possible — either as an authorized user or by getting a secured starter card.

By kickstarting your credit score now, you’ll be able to slowly build that score up over time. 

The earlier you start, the higher your score will be.

Conclusion

When you’re 18 and have no credit history, it means your score doesn't exist. So, if you want to maximize your chances of getting approved for future credit or loans, you need to do everything you can to start building credit now.

Try to become an authorized user alongside a responsible cardholder you trust, apply for a starter card, get a credit builder loan, or simply stay on top of the debt obligations you already have. Of course, that’s just the tip of the iceberg.

Want to learn more about building credit and financial literacy? Check out the EarlyBird blog and find out how to start building your financial future.

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