What is a Good Credit Score for a Teen?

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Lenders will use your credit score to help understand your financial situation. There are many types of credit scores out there and these lenders will use their preferred credit scoring models to determine if you’re creditworthy or not.

As a teenager, you should be focused on setting the right expectations with your finances such as setting a good budget and building a savings. The average credit score of someone in their 20s is around 630 and this can be used as a good starting point.

As someone who is either 18 or in their 20s, a good credit score for a teenager or young adult is between 650 and 725.

This will keep you out of bad credit territory and just on the cusp of being considered very creditworthy. The best way to build credit as a teenager is to focus on establishing income and pursuing a secured credit card.

Average Credit Score by Age

Even though the average score for someone in their 20s is around 660 you’d be shocked at how that changes over time. Typically as someone ages they start to get more comfortable with their finances, understanding credit and likely have a larger income for bigger purchases.

In your 20s, your credit age is still considered very young. This means that most of your credit accounts are going to be 1-2 years old and every time you take on new debt in your 20s, such as student loans or more credit cards, it will significantly impact your credit score.

Don’t fret over your score being slightly lower in your 20s as long as you are building good financial fundamentals around budgeting and saving then you should be just fine as you continue to work on your credit.

The average FICO credit score by age:

  • 20 – 29: 660s
  • 30 – 39: 670s
  • 40 – 49: 680s
  • 50 – 59: 700s
  • 60+: 750s

Key Factors & Improving Your Score

Your credit score is based on 5 main factors: Payment History, Debt Owed, Length of Credit History, Inquiries and Types of Credit. It’s healthy to balance these out and putting more focus on keeping a lower amount of debt, less than 30% of your income, and paying all of your bills on time.

Your age does not matter in credit scoring models but your age can influence which areas you can see improvement on.

As a teenager you should be focused on keeping your payments up to date, total debt owed low and limit how many new credit cards and loans you get.

You should avoid worrying about your age of credit and credit mix as those will change and grow over time. As you age you’ll start to add new types of credit to your profile such as a mortgage or car loan. As a teenager it’s more important to build the right financial habits early.

Why is a Good Score Important as a Teen?

Your credit score is important in opening doors in your future around your finances. Basically if you don’t have a credit score you will have to pay for everything in cash and you may not qualify for some things like housing or insurance. Even if you’re not a strong advocate for credit and don’t want to mess around with it too much it’s still important to get something as simple as a secured credit card.

In today’s market, nearly everyone uses your credit score to understand how you manage your finances. A good credit score can get you a deal with your insurance and a bad credit score can actually stop you from getting an apartment. It will affect the interest rates you receive on loans for a car, house or even a credit card.

This is crucial to understand as depending on your financial situation it could end up costing you thousands in the long-run for something as simple as a credit card with a high interest rate. For example, paying $100 per month on a credit card you owe $2,500 on with a 24% interest rate means you will pay almost $1,000 extra on that $2,500 you used by the time you pay back your debt.

By having a better credit score you could likely secure a better interest rate around 10% and instead of paying around $1,000 you would have only paid around $300 for your $2,500 in debt. This is why making sure your credit is in tip top shape before big purchases is critical to not put you in a financial hole.