Of all the things on the typical 18-year-old's mind, building up a solid credit score is usually not on top of the list. However, with just a little bit of effort and a decent understanding of how credit works, it's actually quite easy to build up a credit score in the "very good" or "excellent" range from scratch in just a year or two.

Here is a "cheat sheet" that can help you achieve an adult credit score while still in your teens.

What your credit score is made of
Fortunately, the largest components of your credit score are the easiest for younger adults to control.

According to myFICO.com, where you can obtain your actual FICO score (the credit score lenders use), there are five categories of information which make up your score. And, some of the smaller categories definitely put younger adults at a disadvantage.

For instance, 15% of your score is based on the length of your credit history. Well, if you are 18 or 19, it's not very long at all. Another 10% is based on the mix of different types of credit you use. Generally, 18 year olds are not going to have mortgages, car loans, or other kinds of credit accounts more common to older adults. In other words, the lack of "diversity" on a younger consumer's credit report can be viewed as a negative.

However, the other three categories make up 75% of your score, and can easily be made to look good for younger borrowers. The largest category, "payment history", makes up 35% of your score and may sound like newer borrowers might be at a disadvantage. Not so. The payment history category only takes into account the payment history of your current accounts. If you have no late payments whatsoever, you'll ace this part of the formula.

Another 30% is made of the amounts you owe. We'll get into this more in a second, but this refers to the amount you borrow relative to the amount you can borrow.

The last 10% is made up of "new credit", or how many accounts you open in short amounts of time. In other words, opening one credit card is fine, and can actually help your score. Opening seven credit cards during the month you turn 18 will probably hold your score back considerably.

Get a credit card (or two) and use it responsibly
Shortly after you turn 18, open a credit card account. I know you've probably been warned about the "evils" of credit cards, especially if your a college student. And the warnings are all true...if you use your credit cards improperly. Just like anything else, there is a right way and a wrong way to use credit cards. Let's take a look at the right way to do it.


I'm talking about opening one, or maybe two credit card accounts and using them for things you were going to buy anyway. If you were going to pay cash for a book, charge it and pay it right off.

There are some excellent credit cards designed specifically for students, and nerdwallet.com maintains an excellent list with descriptions here.

The number one thing not to do is carry a high balance. If you start out with a $1,000 credit limit and run up a balance of $800 on the card, it's not good for your credit. The average "high achiever" (people with awesome FICO scores) carries a balance from month-to-month of about 7% of their credit line.

So, if you have to charge a couple of books and wait until next month to pay for them, it's probably fine. If you max out your card by charging a spring break trip, it's another matter...

Keep an eye on it
Once you've set yourself on the right path by opening a credit account and using it responsibly, keep track of your progress. As I mentioned, myFICO.com can give you the actual score most lenders see, so it may be worth the monthly cost.

Ante Perkovic

Also, all U.S. consumers are entitled to a free copy of their credit report once a year from each of the three major credit bureaus (Experian, Equifax, and TransUnion). Take advantage of this, and make sure the information you see is accurate while you're reading over the reports.

If you use a little restraint and common sense, and know how the system works, by the time you are out of school, you could have a credit score that will be the envy of all the other 20-somethings you know.