Can a 17 Year Old Have a Credit Score?

A credit score serves as a numerical representation of an individual’s creditworthiness, playing a significant role in various financial aspects of adult life. Lenders, landlords, and even insurance companies often review these scores to assess financial responsibility. Many wonder if a 17-year-old can begin establishing this important financial marker.

Understanding How Credit Scores Are Formed

A credit score is a three-digit number that helps lenders determine the risk in extending credit. It is derived from information in a credit report, detailing an individual’s borrowing and repayment history. Common scores, like FICO scores, range from 300 to 850, with higher numbers indicating lower risk.

Several factors contribute to the calculation of a credit score, each carrying a different weight. Payment history, indicating whether bills are paid on time, is the most influential factor, typically accounting for 35% of the score. The amounts owed, or credit utilization (how much credit is being used versus available credit), makes up about 30%. The length of one’s credit history, including the age of accounts, contributes approximately 15%. New credit applications and the mix of different credit types, such as credit cards and loans, each account for about 10% of the score.

Age and Credit Account Eligibility

In the United States, the legal age for entering into most contracts, including credit card agreements and loan contracts, is 18. This means a 17-year-old cannot independently apply for their own credit card or loan account. The ability to legally bind oneself to a financial obligation is a prerequisite for obtaining credit.

Even upon turning 18, federal regulations often require individuals under 21 to demonstrate independent income sufficient to make payments before being approved for a credit card. Without a steady source of income, or in some cases, a co-signer, obtaining personal credit can be challenging for young adults. This legal framework directly impacts a young adult’s ability to establish a credit history.

Building Credit History as a Minor

While a 17-year-old cannot open an independent credit account, they can begin building a credit history by becoming an authorized user on another person’s existing credit card. A parent or guardian typically adds the minor to their account. The authorized user receives a card for purchases, but the primary account holder remains solely responsible for all payments.

When the credit card issuer reports account activity to the major credit bureaus, the authorized user’s credit file may reflect the payment history and credit utilization of that account. This can help a minor establish a credit history before they can apply for their own credit. Not all card issuers report authorized user activity, especially for minors, so confirming this policy with the issuer is advisable. Co-signing for loans is generally not an option for minors, as they cannot legally enter into loan agreements. Co-signing requires the borrower to be a legal adult.

Actions to Prepare for Independent Credit

Before reaching the age of 18, a 17-year-old can take steps to prepare for future financial independence and credit management. Opening a checking and savings account establishes a banking relationship and provides experience in managing funds. Understanding how to track income and expenses through budgeting is also beneficial.

Securing a part-time job allows a minor to establish a source of income, which will be a significant factor when applying for credit independently after turning 18. These actions, while not directly building a credit score, lay a strong foundation of financial literacy and responsible money habits. Such habits are valuable for future financial decisions and building a positive credit profile.