What Is a Credit Score & Why Should You Care Before You’re 25?
Okay, So What Even Is a Credit Score?
Your credit score is a three-digit number that shows how trustworthy you are when it comes to borrowing money. It’s basically your financial reputation on paper.
The score ranges from 300 to 850. Higher = better. Lower = risky (to lenders).
Who Decides This Number?
Three major credit bureaus—Experian, Equifax, and TransUnion—collect data about how you use money, and they give you a score based on things like:
- Do you pay your bills on time?
- How much debt do you have?
- How long have you had credit?
- Do you apply for a bunch of loans or cards often?
Why Should You Even Care Before 25?
If you’re thinking, “I don’t need a credit score right now,” here’s why that mindset could backfire:
| Situation | Why Credit Matters |
|---|---|
| Renting an apartment | Landlords check your score to see if you’ll pay rent on time |
| Getting a car | Low score = high interest rate (or no approval) |
| Applying for a job | Some employers check credit to see if you’re responsible |
| Getting a phone plan | Bad credit could mean a huge deposit or denial |
Translation: Even if you’re not buying a house tomorrow, your credit can impact almost every part of adult life.
How Is a Credit Score Calculated?
Let’s break it down. Here’s what goes into your score and how much it matters:
| Factor | % of Score | What It Means |
|---|---|---|
| Payment History | 35% | Do you pay your bills on time? |
| Credit Utilization | 30% | How much of your available credit are you using? |
| Length of Credit History | 15% | How long have you had credit accounts? |
| New Credit | 10% | Have you opened a bunch of new accounts recently? |
| Credit Mix | 10% | Do you have different types of credit (like a loan and a card)? |
How to Build Credit (Even If You're Just Starting)
Here’s how to start building your score before your 25th birthday:
- Open a secured credit card: You put down a deposit, use it like a normal card, and build credit while spending responsibly.
- Pay everything on time: Yes, even subscriptions and phone bills if they’re tied to credit.
- Keep your usage low: Try not to spend more than 30% of your card’s limit.
- Check your credit reports yearly: Look for mistakes and fix them early. Use annualcreditreport.com.
What to Avoid
- Don’t max out your card. It hurts your score and racks up interest.
- Don’t open too many accounts at once. It makes lenders nervous.
- Don’t ignore your score. Even if you’re not borrowing now, your future self will thank you.
Credit Score Ranges
| Score Range | Rating | What It Means |
|---|---|---|
| 300–579 | Poor | Very limited options, high rates |
| 580–669 | Fair | Possible approval, but expect higher rates |
| 670–739 | Good | Solid. Most lenders will approve you |
| 740–799 | Very Good | Lower rates, better credit card offers |
| 800–850 | Excellent | Best rates and strongest approval odds |
Final Thought: Credit = Access
This isn’t about getting rich or playing the system. Credit gives you access—to apartments, to cars, to financial freedom.
The earlier you start building healthy habits, the more confident and stress-free you’ll feel about money later on.
Want to Start Smarter?
A budget is your best first step to managing credit well. Use our top tool, YNAB (You Need a Budget), to stay on track while building your score.
Try YNAB free with our link here.
You’re already in MoneyMode. Start building a score that works for you—not against you.