At a Glance

Building credit takes a lot of time and effort, but it is worthwhile. Having good credit is now essential for many important life milestones, from getting an apartment to buying a car or house. There are a number of options for 18-year-olds to start their credit journey. From secured credit loans to student loans, proving that you are a responsible borrower is essential for building up your score.

In this article, you’ll learn:


is the average credit score for 18- to 23-year-olds.

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Understanding credit scores

A credit score is a three-digit number that is used by lenders to assess your creditworthiness. It is based on your credit history, which includes your borrowing and repayment history, outstanding debts, length of credit history, and other factors. Your credit score can significantly impact your ability to obtain credit, the interest rate you are offered, and even whether you are approved for a rental or job application.

“Some components of your credit score are based on how you are currently using credit, whereas others are based on how you used credit in the past,” Brian Walsh, a certified financial planner and senior manager of financial planning with SoFi, said in a recent interview. “Assuming you use credit responsibly, building credit early can help your credit history.” One aspect of your credit score is the average age of your credit accounts, as well as the length of your oldest account. It can take time to improve, but it’s important to start early. “

Here are some key things to understand about credit scores:

  1. Credit scores range from 300 to 850: A higher score indicates that you are a lower credit risk and may qualify for lower interest rates.
  2. Credit scores are calculated based on five main factors: Payment history, amounts owed, length of credit history, credit mix, and new credit. Payment history is the most important factor, accounting for 35% of your score.
  3. Your credit report contains the information that is used to calculate your credit score. You can request a free credit report once a year from each of the three major credit bureaus: Equifax, Experian, and TransUnion.
  4. Late payments, delinquent accounts, and bankruptcies can all negatively impact your credit score.
  5. Checking your own credit score does not impact your score. However, when lenders or other organizations check your credit, it can cause a small, temporary decrease in your score.
  6. It is important to regularly check your credit report for accuracy and report any errors to the credit bureaus.
  7. Improving your credit score takes time and effort, but there are steps you can take such as paying your bills on time, paying down debt, and limiting new credit applications.

Related: Credit Score Ranges

What is a good credit score?

A good credit score typically ranges from 670 to 850, depending on the credit scoring model used. Generally, the higher your credit score, the better your creditworthiness and the more favorable interest rates and loan terms you may be eligible for. However, what is considered a “good” credit score may vary depending on the lender and the type of credit you are applying for. For example, some lenders may consider a score of 700 or higher as “good,” while others may require a score of 750 or above. It’s always a good idea to check with the lender or credit bureau to determine what credit score range is considered good for the specific credit product you are interested in.

Why does good credit matter?

Good credit matters for several reasons:

  • Access to Credit: A good credit score can help you access credit, like credit cards, car loans, mortgages, and personal loans. Lenders use your credit score to determine the level of risk you pose as a borrower. A higher credit score indicates that you are a lower risk borrower and can qualify for better interest rates and terms.
  • Lower Interest Rates: A good credit score can result in lower interest rates on loans and credit cards. This can save you thousands of dollars over the life of a loan and help you pay off your debts faster.
  • Employment: Some employers may check your credit history as part of the hiring process, especially if the position involves financial responsibilities. A good credit score can positively reflect your overall financial responsibility and increase your chances of being hired.
  • Housing: A good credit score can also help you rent an apartment or buy a home. Landlords and mortgage lenders may check your credit history to assess your ability to pay rent or mortgage payments on time.
  • Insurance: Insurance companies may also check your credit history to determine your risk level and set your premiums. A good credit score can result in lower insurance premiums.

Learn more: What Is a Good Credit Score?

Ways to build credit at 18

There are a variety of ways you can go about building credit when you turn 18. It’s typically best to try a number of different things to help show you are a responsible borrower. Remember, it takes time to build a good credit score, but the earlier you start, the quicker you’ll be able to boost your score.

1. Become an authorized user

Becoming an authorized user on someone’s credit card is a good option for building up your credit as a teenager. When you are an authorized user, you get the benefits of a credit card without being responsible for the payments. The primary cardholder will be completely responsible for making payments on time. Those payments will appear on your credit report, so hopefully, you have selected someone with a good credit history, as any late payments are going to negatively impact you. In most cases, the primary cardholder is a parent or older, responsible close friend. The authorized user should also be responsible and ensure they are not overspending.

2. Open a secured credit card

Opening a secured credit card can be another helpful way to build credit at 18, especially if you don’t have a credit history or have a low credit score. With a secured credit card, you are required to make a deposit upfront, which serves as collateral for the credit limit. This reduces the risk for the lender, allowing them to offer credit to those with limited or poor credit histories. Using a secured credit card responsibly by making on-time payments and keeping balances low can help establish a positive credit history and improve your credit score over time. Choosing a secured credit card with low fees and interest rates is important, as these can impact your ability to use the card and pay off the balance. Additionally, it’s important to keep track of your spending and pay off the balance in full each month to avoid accumulating high debt levels.

3. Make timely payments

Making timely payments on your accounts is one of the most important factors in building good credit at 18. Your payment history makes up 35% of your credit score, so making on-time payments is crucial to establishing and maintaining a positive credit history. Late payments can stay on your credit report for up to seven years and can significantly lower your credit score. Making timely payments on all your accounts, like credit cards, loans, and utilities, shows lenders that you are a responsible borrower and can be trusted to make timely payments. You can set reminders or automatic payments to ensure you don’t miss any payments.

4. Take out a student loan

Taking out a student loan is another option for building up your credit at a young age. When you make regular payments on your student loan, you show you can manage debt well and establish a positive credit history. Once you’ve paid off your student loans, it displays to lenders that you are capable of paying off a large amount of debt responsibly. This will help you qualify for more credit cards and other loans in the future.

5. Use a credit builder loan

A credit builder loan is a small loan specifically designed to help people rebuild credit. The loan amount is deposited into a savings account, which is then used to pay off the loan over a set period of time. Credit unions or community banks typically offer these loans and may come with higher interest rates or fees than traditional loans. However, they can be a good option for those with no or limited credit history since you can do it without putting down a lot of money. But you need to make sure the lender reports to the credit bureaus so your payments go towards boosting your score.

Learn more:What is a Credit Builder Loan?

6. Check and monitor your credit score

By staying on top of your credit score, you will be more informed about your credit standing status and identify any errors or fraudulent activity that could impact your score. You are entitled to one free credit report per year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Monitoring your credit report will help you understand where you can improve and keep up a good credit history.

Learn more: Monitoring your credit

7. Consider a job

Having a stable source of income can help you establish creditworthiness and demonstrate to lenders that you can manage debt responsibly. Lenders will almost always look at your income level and employment status. Employment also helps your debt-to-income ratio, which measures how much debt you have relative to your income. A lower debt-to-income ratio can open up many doors when it comes to qualifying for credit products with better interest rates and terms. Plus, you can pay your bills and pay off your debts when you have a steady income.

There are plenty of companies that are willing to hire 18 year olds in entry level positions so they can start earning money and gaining independence. Many retailers and grocery stores have begun to pay a living wage, which is excellent news for younger people looking for a job. You can consider becoming a camp counselor, a server, lifeguard, delivery driver, administrative assistant, or grocery clerk. Although the federal minimum wage hasn’t increased in a long time, the demand for these jobs is exceeding the amount of available workers. You could potentially find an hourly job that gives you $17 an hour or more, which can do wonders for your finances.


Yes, it is smart to start building credit at 18. The younger you start your journey of financial stability the better off you will be. It will be easier to qualify for credit products, loans, credit cards, etc. Buying your first home, car, and starting a business will all be in your grasp.

Generally, most 18-year-olds have limited or no credit history, which means they may not have a credit score or may have a low credit score. This is because credit scores are based on an individual’s credit history, which takes time to build. The average credit score for 18- to 23-year-olds is 674.

Getting a loan at 18 without credit is possible, but it may be more difficult and come with higher interest rates and less favorable terms. When you have no credit history, lenders cannot assess your creditworthiness and determine whether you are a good risk for lending. As a result, they may require a co-signer or collateral to secure the loan. Alternatively, you may be able to obtain a loan from a credit union or community bank that offers special programs for young borrowers or individuals with no credit history.

The time it takes to build credit at 18 can vary depending on a number of factors, such as the steps taken to establish credit, the frequency of credit usage, and the repayment history of credit accounts. Generally, it takes at least six months of credit history to generate a credit score, but it may take longer to build a good credit score. It’s important to note that building credit is a gradual process that takes time and patience.