SoFi

You can build your credit score with a credit card, provided you use it responsibly. That means paying your bill on time, all the time, and maintaining a low credit utilization rate, among other financial habits. This behavior can help build your credit by showing you’re diligent about meeting your debt obligations, which is something potential lenders look for.

What if you’re interested in using a credit card to build credit, but don’t yet have a credit card? In this case, there are credit cards that are marketed to those with a limited credit history who want to build their credit. Depending on your personal situation, here’s a look at the best way to build credit with a credit card.

Building Credit With a Credit Card

If you’re looking to build up your credit, a credit card can be a great place to start. Getting a credit card may be easier than getting approved for a mortgage or other type of loan. Plus, unlike most other loans, you won’t have to pay any interest with a credit card as long as you pay your statement balance in full each month.

Recommended: How to Avoid Interest on a Credit Card

8 Tips to Build Credit With a Credit Card

Curious how to build credit with a credit card? Here are eight tips to try.

1. Regularly Pay Your Bills on Time

Paying history is one of the biggest factors that makes up your credit score. If you’re focusing on building your credit score, you’ll want to make sure that you pay your bills on time, each and every month. If your credit report shows a history of late or missed payments, that can really drag down your credit score.

2. Maintain a Low Credit Utilization Rate

Another factor that helps to build credit is maintaining a low credit utilization rate, ideally under 30%. Your credit utilization rate is your total outstanding debt balance divided by your total credit limits expressed as a percentage. You can lower your utilization rate by paying down debt or increasing your total credit limit.

Recommended: What Is the Average Credit Card Limit?

3. Pay Your Credit Card in Full

In addition to paying your credit card statement before the due date, it’s also a great idea to pay the full statement balance every month, if possible. This helps lower your credit utilization rate, which is an important factor in determining your credit score. Additionally, it prevents you from paying interest.

If you’re not able to pay your credit card statement in full, make a plan and consider adjusting your financial habits going forward.

Recommended: Understanding Purchase Interest Charges on Credit Cards

4. Become an Authorized User

If you’re not ready or can’t get approved for a credit card in your own name, consider becoming an authorized user on the credit card account of a trusted friend or family member. You’ll receive a secondary card in your name, also known as a supplementary credit card, and you can benefit from the payment history and good credit of the primary account holder. This can help you when you go to get a credit card for the first time on your own.

However, you’ll want to be careful about whose account you become an authorized user on. If they miss payments or pay late, it can affect your credit score negatively.

5. Use Your Card Regularly

It’s not enough to simply have a credit card — you also have to use it. Using your credit card responsibly shows potential lenders that you’re more likely to be responsible with new debt or loan obligations.

Consider using your credit card to pay some of your monthly bills to keep it in regular use. Just make sure that you’re using credit cards wisely by also setting aside money to pay off the statement in full when it comes due.

Recommended: When Are Credit Card Payments Due?

6. Consider a Secured Credit Card

If you’re having trouble getting approved for an unsecured credit card on your own, you might consider a secured credit card. With a secured card, you typically put down a refundable security deposit, which serves as your credit limit.

As you consistently and responsibly use your secured credit card, you may be able to transition to an unsecured credit card.

7. Limit New Credit Applications

Another factor that goes into determining your credit score is how many new credit applications you’ve had recently. Almost every time that you apply for new credit, such as a credit card or a loan, the potential lender will do a hard pull on your credit report. Having too many loan and credit card applications can hurt your credit score, albeit temporarily.

8. Keep Your Credit Accounts Open

If you’ve had trouble in the past with credit card debt, your first thought might be to cut up your credit card and close your account. One reason to keep your credit card accounts open is that another factor that goes into determining your credit score with the credit bureaus is the average age of your accounts. Keeping an old account open — especially if it comes with no annual fee — and managing it responsibly can be a good way to build credit.

Alternative Ways to Build Credit

Besides leveraging credit cards, there are a few other ways to build credit.

Get an Auto Loan

If you’re in the market for a new or used car, consider getting an auto loan. Like a credit card, any auto loan balance or payment history that you have will show up on your credit report. Making reliable and on-time payments on your auto loan can have a positive impact on your credit score.

Take Out a Personal Loan

Besides an auto loan, a personal loan is another type of debt product that typically shows up on your credit report. With a personal loan, you receive money upfront from the lender and then pay it back over time, with interest. Having a history of on-time payments on a personal loan can be another way to build credit.

Get a Cosigner

If you’re not ready to apply for credit in your own name or are having trouble getting approved for a loan or credit card, you might consider a cosigner. A cosigner is a trusted friend or family member who will sign their name to your loan alongside your own. That makes them also financially responsible for the debt as well, so you’ll want to be careful about who you choose to cosign with. However, it can be a helpful step toward establishing credit.

The Takeaway

Using a credit card can be a great way to build credit — as long as you do it responsibly. Aim to use your credit card in such a way that you can pay off your full statement balance completely. Showing responsible payment history over time and keeping your overall credit utilization rate low are two of the biggest factors that make up your credit score.

[cc_takeway_guide]

FAQ

What is the fastest way to build credit with a credit card?

Building credit is usually not something that will happen overnight. Instead, most potential lenders are looking for a history of making on-time payments over time. This can take months or potentially even years to build your credit to the desired level.

How do you use a credit card to build credit for the first time?

When you get a credit card for the first time, you’ll want to start using the card to pay for some of your monthly expenses. Just make sure to set aside the money for those purchases, so that you can pay your credit card statement in full when it comes at the end of the month. Establishing a history of on-time payments will help you to build your credit, as it shows other potential lenders that you’ll be responsible with your debt obligations.

How long does it take to build credit with a credit card?

Establishing credit is not something that usually happens over a short period of time. Instead, building your credit is something that happens over months, if not years. Demonstrating a history of reliably meeting your debt obligations is one of the biggest factors that makes up your credit score, so always aim to pay your bills on time and in full, each and every month.

---

Photo credit: iStock/Ridofranz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOCC-Q424-003

Read more

For those stumped about which presents to buy, a top gift that parents and grandparents really hope to find under the tree this season is a gift card, according to an exclusive survey.

If you’re like many people, you plan to spend a considerable amount on loved ones as you celebrate this winter. For instance, one recent Gallup poll revealed that Americans plan to spend over $1,000 on gifts (a new high) for the 2024 holidays. But there’s no need to stress or spend tons of time hunting because you’ll know exactly what to buy.

Here, in our exclusive survey of 1,000 individuals (250 of each — moms, dads, grandmothers, and grandfathers), you’ll learn the holiday present they really want this season — and what they don’t want. Get ready to find out and then get shopping!

Source: Based on a What People Actually Want This Holiday Season survey of 1,000 U.S. adults from October 26, 2022 to October 27, 2022.

Gift Cards Are the Favorite Gift by Far

The number-one gift requested by moms, dads, grandmothers, and grandfathers is … a gift card! And it wasn’t even close. Gift cards were the most-requested gift across the board.

Almost 33% of respondents picked gift cards as their most-wanted holiday gift. Here’s how it breaks down across the generations:

•   Moms: 39%

•   Dads: 31%

•   Grandmothers: 34%

•   Grandfathers: 27%

The Type of Gift Card You Give Makes a Difference

There are all kinds of gift cards to choose from, including gift cards for restaurants, stores, and airlines, to name just a few. So, as you get ready to shop and celebrate the holidays without blowing your budget, which type should you get for your parents and grandparents?

A gift card that can be used anywhere, like a Visa gift card, was the top choice, selected by:

•   45% of moms

•   44% of grandmothers

•   40% of grandfathers

•   38% of dads

The one group that wants a different kind of gift card? Moms ages 35 and up. They preferred a gift card to a retailer like Target, Amazon, or Walmart.

The way gift cards function is similar to how credit cards work, since your parents and grandparents can use them to buy whatever they like. Perhaps that’s why they were so popular in our survey: Your relatives can pick out exactly what they want.

Recommended: Breaking Down the Different Types of Credit Cards

Skip the Fancy Jewelry

You might think mom would be thrilled with luxury goods like an expensive necklace, bracelet, or earrings, but jewelry is actually at the very bottom of her list. When asked the gift they wanted least, most moms (22%) said fine jewelry. Dads agreed — 21% chose fine jewelry, such as a watch, as their least favorite holiday gift.

Grandparents also said no thanks to fine jewelry:

•   26% of grandmothers picked it as their least favorite gift

•   21% grandfathers chose at gift they wanted least

Recommended: Secrets to Not Paying Full Price

Holiday Gift Ideas for Mom

Here’s what Mom wants most:

•   A gift card: 39%

•   No gift at all — she just wants to spend time with family: 14%

•   An experience (like a concert or vacation): 10%

•   Clothes or shoes: 9%

•   A homemade gift like a photo collage: 7%

•   Electronics: 6%

•   Jewelry: 6%

•   Home goods: 5%

•   Donation to a charitable organization: 3%

•   Beauty/health products: 2%

Holiday Gift Ideas for Dad

Here’s what dad wants most:

•   A gift card: 31%

•   Electronics: 14%

•   No gift at all — he just wants to spend time with family: 12%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 10%

•   Jewelry: 9%

•   A homemade gift like artwork: 5%

•   Donation to a charitable organization: 4%

•   Home goods: 2%

•   Beauty/health products: 2%

If you’re thinking about getting dad the electronics he wants, but you don’t have the cash to pay for the gift upfront, applying for a credit card, and charging the electronics to it, is an option you may want to consider.

Holiday Gift Ideas for Grandmothers

•   A gift card: 34%

•   No gift at all — she just wants to spend time with family: 22%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 8%

•   A homemade gift like artwork: 6%

•   Electronics: 5%

•   Jewelry: 4%

•   Donation to a charitable organization: 3%

•   Home goods: 3%

•   Beauty/health products: 2%

Holiday Gift Ideas for Grandfathers

•   A gift card: 27%

•   No gift at all — he just wants to spend time with family:14%

•   Electronics: 12%

•   An experience (like a concert or vacation): 10%

•   A homemade gift like artwork: 10%

•   Clothes or shoes: 8%

•   Donation to a charitable organization: 8%

•   Home goods: 5%

•   Jewelry: 4%

•   Beauty/health products: 2%

Recommended: 41 Charities to Support This Year

Who Buys the Best Gifts?

It’s unanimous: Moms, dads, grandmothers, and grandfathers all agree that their spouse or partner is tops when it comes to choosing holidays gifts. No other person even comes close.

Who Gives the Best Gifts?

•   Spouse/partner: 37%

•   Parents: 18%

•   Friends: 10%

•   Siblings: 9%

•   Other relatives: 9%

Whose Gifts Rate the Worst?

Ranking at the bottom of the best gift-giver list: In-laws and bosses. Only 4% of respondents said their mother-in-law and father-in-law give good gifts, and just 1% said their boss does.

Regifting is Real — and It Can Be Pretty Awkward

There’s a lot of regifting going on: 41% of our respondents admitted they’ve done it. But when the tables are turned on them, things can get a little uncomfortable. Fortunately, many have a sense of humor about it.

Almost 1/3 of Moms Have Been Regifted a Gift They Gave First

•   68% thought it was funny

•   32% were hurt, annoyed, or mad

Yet this didn’t deter them from doing it themselves: 38% of moms have regifted what they didn’t want. Most of these unwanted gifts were from friends.

Almost Half of Dads Have Been Regifted a Gift They Gave

•   71% thought it was funny

•   28% were hurt, annoyed, or mad

Dads are even more likely than moms to regift: 47% of them have done it — mainly with presents from distant relatives.

Lots of Unwanted Gifts Are Sitting in a Closet Someplace

When they get a Christmas present they don’t want or need, the overwhelming majority of respondents said they hang onto them, rather than exchange them. This was the answer chosen by:

•   80% of grandmothers

•   79% of moms

•   74% of grandfathers

•   70% of dads

(Perhaps eventually they decide to sell their unwanted stuff, however. It can be a good way to bring in some cash.)

So Whose Gifts Do They Take Back?

Of those parents and grandparents who return or exchange gifts:

•   Moms are most likely to return gifts from friends

•   Dads are most likely to return gifts from parents or other relatives

•   Grandmothers are most likely return gifts from distant relatives

•   Grandfathers are most likely to do return gifts from distant relatives or coworkers

Recommended: Tips for Using a Credit Card Responsibly

Plenty of Moms and Dads Are Wishing for a Vacation

If you splurge and get your parents a trip as their holiday gift, expect them to waste no time in packing their bags. Of the moms and dads who chose an experience as the gift they most want for the holidays, taking a vacation was at the very top of the list.

While paying for a vacation can be expensive, you might want to think about splitting the cost with your siblings or putting it on your credit card to help cover the cost. This is one reason why getting a credit card can be helpful when you’re buying holiday gifts.

Time Together Might Be the Greatest Gift of All

You may not need to get your parents a lot of presents (besides a gift card, that is!). A number of moms and dads who took our survey said they wanted family time over the holidays more than anything. In fact, for moms, spending time with family is their second most-wanted gift.

For dads, family time came in third. Electronics like gaming systems edged it out slightly.

Grandmothers and grandfathers want to spend time with family most of all. Each of them chose it as their second favorite gift option.

The Takeaway

One specific holiday gift will please your parents and your grandparents this year: a gift card. Not only does this make your shopping easier, but it gives your loved ones exactly what they want. A gift card that can be used anywhere, like a Visa gift card, is what the respondents to our survey wanted most.

If you’re looking for other gift options, dads are partial to electronics, like gaming equipment, and both moms and dads would be happy to find airline tickets for a vacation in their stocking.

One way to fund holiday gifts can be by using a credit card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

---

Photo credit: iStock/seb_ra

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q424-022

Read more

If you have an old or expired credit card, you might shred or otherwise dispose of it. Most credit cards come with an expiration date printed on the face of the card alongside the credit card account numbers. If you keep your account open, you’ll usually get a new card in the mail before your previous card expires.

When you get your new credit card or if you’ve decided to close your account, you’ll want to be careful about what to do with your expired credit card. There are a few things to keep in mind to make sure you keep your financial information safe.

Things to Do With an Old or Expired Credit Card

If you have a credit card that’s closed or has passed its credit card expiration date, here are some options to consider as you decide what to do with the card.

Shredding Your Credit Cards

The simplest thing you can do after closing a credit card is to shred it. Most modern shredders have the ability to shred plastic credit cards in addition to paper. If you don’t have a shredder, you can cut your card into multiple pieces with scissors.

You might consider putting each piece of your card in a different trash can or trash bag. This will minimize the chance that someone might be able to reconstruct your full account number.

Disposing of Metal Credit Cards

It gets a little more complicated if you’re disposing of a metal credit card. Most retail shredders will not be able to handle shredding a metal credit card. If you have an expired metal credit card, you can try the following:

•   Cutting it up with metal snips

•   Turning it in at a physical bank branch

•   Sending it back via certified mail to your credit card issuer

Contacting Expired Credit Card Hobbyists

Believe it or not, there are people who collect old credit cards as a hobby. They may do so because they are fascinated by the history of credit cards. While you might not feel comfortable having your credit card and account information in the hands of someone else, if you are, there may be someone who would want to have it.

Just keep in mind that while there are some old or historical cards that have actual value as collectibles, most current credit cards won’t be worth anything to a collector.

Deactivating Magnetic Strips and Chips

As part of the process of destroying a credit card that’s past its credit card expiration date, it’s not just the account number that you’ll need to take care of. Most credit cards have either a magnetic strip or an EMV chip (or both) that contain account information that you’ll need to make sure is destroyed.

If you have a contactless credit card, remember that it also contains potentially sensitive information.

Keeping Your Card Out Of The Recycling Bin

Above all else, don’t just throw your card in the recycling bin. While most credit cards are plastic, that doesn’t mean they can be recycled as-is. Check with your local trash or recycling authority to see if credit cards can be recycled. Even if your card can be recycled, it’s not a great idea to toss it in the recycling bin whole due to security risks.

Recommended: Tips for Using a Credit Card Responsibly

Things to Do Before You Close Your Credit Card Account

It can be difficult to know when to cancel a credit card due to the implications it can have for your credit score. Especially if the account you’re thinking about closing is one of your older ones, it can impact the length of your credit history. As this is a factor that goes into determining your credit score, canceling a long-standing card could cause your score to drop.

So before closing your credit card account, consider the following options first.

Downgrade Your Card

Instead of closing your credit card account, you might consider downgrading your account to a different type of credit card. Most credit card issuers have a variety of different cards, so you might find one that’s a better fit for you. Plus, keeping your account open can help maintain your average age of accounts.

Recommended: How to Avoid Interest On a Credit Card

Upgrade to an Unsecured Card

If you currently have a secured credit card, you can move from a secured card to an unsecured credit card rather than simply closing out your account.

A secured credit card can make sense if you have a limited credit history or are working on rebuilding your credit history. But once you have an established history of adhering to credit card rules like making on-time payments, you may be able to qualify for an unsecured card.

Keep Your Card for Small Purchases

It may make sense for you to keep your credit card and use it to make small purchases here and there, especially if it doesn’t have an annual fee. Keeping a credit card open can help you maintain your average age of accounts, especially if the card is one of your older ones.

Just keep in mind that if you do decide to keep it open, you may want to make occasional small purchases on it. Otherwise, your credit card issuer may close it for inactivity.

Recommended: Can You Buy Crypto With a Credit Card?

The Takeaway

If you have an old or expired credit card, it’s important to take the necessary steps to keep your financial information safe. In most cases, it’s a good idea to shred your expired card so that nobody can access your information. You might also just keep your credit card account open to avoid lowering your average age of credit accounts.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can an expired credit card be charged?

In most cases, if you try to make a purchase after your credit card’s expiration date, it will be declined. Keep in mind, though, that merchants may continue to attempt to charge a card after its expiration date if you have it set up for recurring charges. Check with any merchants where you have recurring charges to see how this might affect you.

Can I cancel a credit card online?

Yes, in most cases you do have the ability to cancel a credit card online. You could do so through your online account or possibly by using a chat feature on the card issuer’s website. If you’re not able to cancel your credit card online, you may have to call the customer service number on the back of your card to cancel your card.

What should I do before canceling a credit card?

Knowing when to cancel a credit card is a matter of balancing a variety of different factors. Before canceling a credit card, make sure that it won’t drastically affect your credit score. You’ll also want to contact any merchants where you have recurring charges to update your account information. That will ensure that you don’t have any interruption in service.

---

Photo credit: iStock/dzika_mrowka

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOCC-Q324-038

Read more

The average credit for 30-year-olds is 690, according to the most recent analysis of FICO® scores in 2024 by Experian.

Knowing how you compare with other borrowers is an interesting way to look at your finances. Perhaps you want to improve your credit score, or maybe just you’re wondering if your credit score is good enough to secure the financing you want. Either way, a better credit profile could translate into better lending terms and, ultimately, more money back in your pocket.

Here’s what you need to know about average credit scores by age 30 and steps you can take to boost your score.

Average Credit Score by Age 30

As mentioned, the average credit score for Millennials is 690. This is slightly lower than the national average FICO Score of 717, but that’s to be expected. After all, it takes time to build good credit, and a borrower’s credit score tends to increase with age.

If you have an average credit score of 690 by age 30, it falls within the “good” range. This means you’ll likely be able to qualify for a mortgage, car loan, and other types of financing applications, though you may not be offered the most favorable terms. (Saving up for a big-ticket item? A spending app can help you track savings and stay on top of recurring expenses.)

What Is a Credit Score?

Taking a step back, it’s important to understand what a credit score is and where it comes from. A credit score is a three-digit number that lenders use to assess how risky it is to loan money to a borrower. Scores range from a low of 300 to a high of 850. In general, the higher your credit score, the more likely you are to get the best interest rate and loan terms.

There’s no starting credit score for those just starting to establish their credit history. The two main players — FICO and VantageScore — each look at a variety of factors to come up with a person’s credit score.

Lenders may use one or both of those scores to assess a borrower’s creditworthiness, so it can be helpful to understand the differences between a FICO Score and VantageScore.

Recommended: FICO Score vs. Credit Score

What Is the Average Credit Score?

As of October 2023, the national average credit score across all ages is 717, according to FICO. That’s one point lower than earlier in the year, which could be the result of months of high interest rates and inflation. That said, 717 falls easily within the “good” credit score range and could help you qualify for more favorable lending terms.

Average Credit Score by Age

When broken down by age, you’ll find the average credit score as follows:

Age	Credit score
Generation Z (18-26)	680
Millennials (27-42)	690
Generation X (43-58)	709
Baby boomers (59-77)	745
Silent generation (78+)	760

Source:Experian

What’s a Good Credit Score for Your Age?

It’s common to want to see how your personal, professional, or financial track record compares to your peers. But that may not be the best approach for assessing your credit score. Instead, it can be helpful to see where your score falls on the standard 300-850 scale. A credit score of 670 or higher is generally considered good, regardless of a person’s age.

How Are Credit Scores Used?

Credit scores can be used in a number of ways. Let’s look at some common scenarios when your credit score may come into play:

•  You’re applying for a loan. Whether you’re applying for an auto loan, mortgage, or personal loan, a lender will use your credit score to determine the risk associated with loaning you the money.

•  A lender is determining your interest rate. Generally speaking, the better your credit score, the better interest rate you’ll be offered.

•  A lender is setting your credit limit. The amount of credit you qualify for is based in part on your credit score. If you manage your credit well, you might qualify for a higher credit limit.

•  You’re applying for car insurance. When quoting a car insurance rate, insurers often factor in your credit score along with other factors, like your driving history.

Factors Influencing the Average Credit Score

According to Experian, the average credit score has generally trended upward over time. This can be explained by a number of factors, including:

•  Education. More people are aware of their credit scores and are paying their bills.

•  Age. Data shows a direct correlation between higher credit scores and older generations.

•  Economics. Experian data scientists point to steadily decreasing unemployment levels as one reason for the upward trend of credit scores.

•  Credit utilization. Overall credit utilization ratios have increased to 30% (up from 28% a year ago) for all borrowers, which affects the average credit score.

•  Delinquencies. Mortgage delinquencies are lower than they were before the pandemic, which could be a result of the low interest rates that were offered.

Recommended:How Often Does Your Credit Score Update?

How to Strengthen Your Credit Score

If your credit score isn’t where you want it to be, take heart. There are steps you can take to help boost your numbers over time.

•  Pay your bills on time, every time. Whether you use a money tracker app to manage upcoming bills or go the autopay route, find a bill paying system that works for you.

•  Manage your credit utilization. Lenders look at how much of your available credit you’re using. By paying off debt, you can lower your credit utilization ratio, which in turn can help improve your score.

•  Keep accounts open. A long credit history can help strengthen your credit profile. If you have an older account in good standing, consider keeping it open.

•  Check your credit report regularly. Mistakes happen. If one ends up on your credit report, take steps to address it right away. It’s a good idea to keep an eye on your credit score as well. You can get your score for free through banks, credit card issuers, and Experian.

How Does My Age Affect My Credit Score?

Technically speaking, your age doesn’t affect your credit score. However, credit scores do tend to increase with age. That’s because the longer a person lives, the more opportunities they have to build up a credit history, earn a higher income, and pay off debts.

At What Age Does Credit Score Improve the Most?

According to Experian’s 2023 findings, credit scores tend to improve the most between the ages of 59 to 77, when many Americans are either starting to think about retirement or settling into their golden years. (The average credit age among this age group is 745, which is considered very good.)

One possible explanation for the jump is that older people may have older credit accounts in their credit profile and, as a result, enjoy a higher average age of accounts. Also, people 59 and older typically have a more stable income and lifestyle, both of which can make bill paying and money management easier.

What Factors Affect My Credit Score?

Understanding what factors impact your credit score can go a long way toward helping you maintain a good score. Note that FICO and VantageScore use different factors and weightings when calculating a credit score. Let’s take a look at what goes into both scores.

A FICO Score, which is used in 90% of lending decisions, considers how a consumer handles debt. It weights scores according to the following categories:

•  Payment history (35%)

•  Credit utilization (30%)

•  Length of credit history (15%)

•  New credit inquiries (10%)

•  Credit mix (10%)

Though there’s some overlap with FICO, a VantageScore is based on the following categories:

•  Payment history (40%)

•  Depth of credit (21%)

•  Credit utilization (20%)

•  Balances (11%)

•  Recent credit (5%)

•  Available credit (3%)

As you can see, while the weighting is different, both models pay close attention to how much credit you’re using, how well you’ve been paying on it, and how long you’ve been managing credit.

How to Build Credit

No matter how old you are, there are plenty of ways to build credit. As previously mentioned, on-time bill paying and a low credit utilization rate can both go a long way toward boosting your credit profile. But here are some other strategies to consider as you establish your credit.

•  Become an authorized user. If someone is willing to take you on as an authorized user (your parents, for example), their payments may be reported on your credit history.

•  Apply for a beginner credit card. A couple of options to consider: a student credit card, which is an unsecured card to help college students build credit, or a secured credit card, which requires a cash deposit as collateral.

•  Consider a credit builder loan. A credit builder loan takes the loan amount and deposits it into a savings account for you. You’ll repay the loan in installments, and once it’s paid off, you’ll receive the money. On-time payments are reported to the credit reporting agencies.

•  Look into an installment loan. Auto loans and personal loans are examples of installment loans that can help a qualified borrower build up their credit history.

•  Enroll in a program that reports rental or utility payments. Find a service that reports your monthly rent or utility payments to the credit reporting agencies. Some services are free, but others may charge a fee.

Credit Score Tips

Looking for ways to help improve your credit score? Keep these tips top of mind:

•  Stay on top of bill paying.

•  Pay down debt.

•  Keep track of your credit score and review your credit report at least once a year.

•  See an error in your credit report? Dispute it with each credit bureau that has the mistake as well as the business that reported the inaccurate information.

•  Write a goodwill letter to the creditor asking for negative (but accurate) information to be removed from your credit report. They’re under no obligation to honor your request, but it’s worth a shot.

The Takeaway

The average credit score by age 30 is 690, which is slightly lower than the national average score of 717. However, a borrower’s age doesn’t directly impact their credit profile. Rather, data shows that the older someone is, the more likely they are to have a higher credit score. That’s because they’ve had more time to build up their credit profile.

Regardless of your age, there are ways to help boost your credit score and potentially qualify for better lending terms. Some strategies include paying bills on time, managing how you use your available credit, and keeping older accounts that are in good standing open.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What is a good credit limit for a 30-year-old?

The average credit limit for all credit cards for people in their 30s is $27,533, according to Experian.

Is 700 a good credit score for a 25-year-old?

A credit score of 700 at any age is considered good.

Is $10,000 a high credit limit?

Ten thousand dollars can be considered a good limit for people who have managed their debt and credit cards responsibly. To put that amount in perspective, the average limit for all credit cards combined is $29,855, according to Experian.

What credit limit can I get with a 750 credit score?

A 750 credit score is a good credit score, but it’s not the only piece of information lenders use to determine your credit limit. They consider a number of other factors, including your payment history, income, and credit utilization.

Can you have a $100K credit limit?

Though not common, it is possible to find a credit card with a limit of $100K. However, you’ll likely need to have good credit and demonstrate that you have the financial resources to support repayment. For example, a business that earns millions of dollars each year and has employees as authorized users on the card may be granted a higher credit limit.

What is a good credit score to buy a house?

In general, you’ll need to have a credit score of at least 620 to qualify for many types of mortgages.

---

Photo credit: iStock/Pekic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q424-022

Read more

If you’re wondering whether financing a phone builds credit, the answer is that it depends. In some cases, financing a phone may help you build credit — but only if the financing company reports your payment activity to the credit bureaus.

Further, you’ll need to consistently make on-time payments if you’d like to build your credit. If your phone account ends up in collections, that will have the opposite effect on your credit. Here’s a closer look at how financing a phone can affect credit.

How Does Cell Phone Financing Work?

Think of cell phone financing much like taking out a loan. But instead of getting funding, you’re getting a cell phone that you will then pay off over time.

Some people may decide to go this route if they don’t have enough money saved to buy a new phone outright. Others may even choose to lease a new phone, which entails making monthly payments that allow for an easy upgrade to a newer phone on a more regular basis.

When financing a phone, you’ll most likely sign a contract outlining the value of the phone and the payment terms, such as the monthly amount due and the term length.

Cell Phone Financing Options

You can find different cell phone financing options, including through your wireless carrier, phone manufacturer, or a third-party company. Depending on which option you choose, you may undergo a hard credit inquiry when you apply for financing. This could temporarily affect your credit score, given new credit is one of the factors considered in determining your FICO® score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Wireless Carrier

When you purchase or lease a phone through your wireless carrier, you’ll most likely be presented with different payment options. If you’re purchasing a phone, you may be able to sign up for a monthly payment plan — sometimes without incurring interest. You may even be able to negotiate a discount if you’re a repeat customer or choose certain wireless plans.

For those who want to lease, your wireless carrier may offer options like the ability to periodically upgrade your phone by trading in your existing phone for a newer model. Or, you may be offered the choice of buying the phone after a certain amount of payments.

Whichever option you choose, know that sales tax may not be included in your monthly payment — you’ll need to pay that upfront. Plus, you may need to make a down payment depending on your credit profile. Those with good credit, as opposed to a bad or fair credit score, may secure more favorable terms.

Recommended: When Are Credit Card Payments Due?

Phone Manufacturer

Major phone manufacturers like Apple and Samsung typically have their own installment plans to purchase their phones. With these plans, you’re approved for a certain amount that you can use to finance a phone, which you’ll then pay off over time.

Like wireless carriers, some phone manufacturers have the option to upgrade to a newer model by offering credit for trading in your existing phone. In some cases, you may be charged interest, so it’s best to review the terms before committing to a plan.

Recommended: What Is a Charge Card?

Third-Party Companies

Some electronics stores offer financing for cell phones if you open a store credit card and use it to purchase a phone. You may be able to make interest-free monthly payments if you pay for the phone in full within a certain period of time.

Recommended: How to Avoid Interest On a Credit Card

Buy Now, Pay Later

Many retailers offer buy now, pay later options. Some don’t charge interest as long as you meet their payment terms. However, there can be fairly high late fees, so check the terms and conditions before proceeding.

Cell Phone Financing Options That Build Credit

Not all cell phone financing options help you build credit. That’s because not all companies that provide financing will report your payment activity to the major credit bureaus. As such, that information won’t get added to your credit report.

That being said, there are ways that financing a phone can help you build or establish credit. This includes the following:

•   Financing through a phone manufacturer: Major phone manufacturers have their own branded credit cards or financing accounts on which they will report your activity to the credit bureaus. As long as you keep making on-time payments, this can help to build your score. To ensure your payment activity will affect your credit, it’s best to check with the manufacturer.

•   Financing through a third-party company: Many stores offer branded credit cards that you can use to finance your phone. This is another way that financing a phone can build credit, since the company will generally report your payment information to the major credit bureaus.

Recommended: Effect Paying Off Debt Has on Your Credit Score

Cell Phone Financing Options That Don’t Build Credit

In most cases, financing a phone through your wireless carrier won’t help you build your credit. That’s because these companies most likely won’t report your payment activity to the credit bureaus. If your payment activity does not appear on your credit report, it won’t have an effect on your credit.

For similar reasons, buy now, pay later plans also usually don’t help you build credit.

Should You Finance Your Phone to Build Credit?

Financing a cell phone in order to build credit is best for those who are able to consistently make on-time payments. That way, this positive payment activity will get reported to the credit bureaus and help to build your score.

However, if you’re unsure whether you’ll be able to do so, it may make sense to find an alternative way to build credit. Even one missed payment could negatively affect your credit and land you in more debt than you’d originally anticipated.

Is Financing a Cell Phone Worth It?

Financing a phone can come with some advantages, such as freeing up cash you can use to fund other financial goals. If you can get financing with zero interest and know you’ll be able to pay off your phone in full within the agreed-upon terms, then it may be worth considering if you want to have more cash available to you. If your financing plan doesn’t have a prepayment penalty, it can even give you the flexibility to pay off the phone early if you want.

However, if you need to pay interest or you believe that you won’t be able to pay off the phone within the zero-interest period, you’ll need to carefully consider the financial repercussions. Interest charges can add up, so look at your budget to see whether you can truly afford the phone you want.

If not, it may be worth holding onto your phone until you can save up for a new one or choosing to finance a phone that costs less.

Other Ways to Build Credit

Financing a phone isn’t the only way to build credit. Some of your other options include using a credit card responsibly and taking out a personal loan.

Using a Credit Card Responsibly

Using a credit card responsibly can help you build credit. Because payment history is the biggest factor in what affects your credit score, making timely payments on your credit card balance can go a long way toward building your credit score.

Plus, if you pay for your cell phone with whichever type of credit card you have, you might secure cell phone insurance coverage. See if your card offers that as a perk.

Recommended: Tips for Using a Credit Card Responsibly

Taking Out a Personal Loan

Getting a personal loan is another way to potentially build credit. How personal loans can build credit score is through on-time payments you make on the loan, since lenders will report your activity to at least one credit bureau.

Before taking out a loan, however, check the terms carefully. You’ll want to look at what interest rate you’ll be charged and what your monthly payment amount will be.

The Takeaway

Financing a phone can help you build credit, as long as the financing company reports your payment activity to credit bureaus. You will need to check with the lender to learn what their policy is. If they don’t report to the major credit bureaus, you may want to consider other ways to finance your cell phone and help build your credit.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do cell phone financing options report to credit bureaus?

Some financing providers report payment activity to the credit bureaus, while others don’t. For instance, wireless carriers most likely won’t report payments on cell phone financing, whereas phone manufactures and some electronics stores do.

Does upgrading your phone affect your credit score?

Upgrading your phone may affect your credit score if the financing company needs to conduct a hard credit inquiry before approving you for a phone. A hard credit inquiry typically lowers your credit score slightly for a brief period of time.

How long does a phone bill stay on your credit report?

Active accounts can stay on your credit report for as long as the account is open and being reported to the credit bureaus. If you have a charged-off account — meaning your creditor has tried to collect payment from you and failed — that information may remain on your credit report for seven years.

---

Photo credit: iStock/Delmaine Donson

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q424-005

Read more