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What Are the Minimum Data Points to Establish a FICO Score?

July 24, 2014
Credit Score
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Having a FICO score is essential to getting credit for the rest of your life. But what are the minimum data points you must have in order to actually generate a FICO score, since we don’t come with one at birth?

There are only a few data points necessary to establish a FICO score, and there are several ways to put those data points onto the radar of the credit bureaus. After all, to get credit, you have to establish credit. Here’s how:

Establishing a FICO score: Data point No. 1

The first data point is having one – just one – credit account that has been opened for six months or longer. The idea is that six months gives creditors a reasonable period of time to assess whether or not you’re a deadbeat. Years of risk management and data analysis have set that six-month threshold as showing you are serious about getting and maintaining credit.

Data point No. 2

You may have more than one account open in those first six months, but at least one must not be under dispute. Challenging a charge or two is to be expected from time to time. However, if you have many accounts open and several of them have a dispute open, it’s a red flag to creditors that you may be a risk – a consumer who looks to escape payment of many purchases.

That’s why you want at least two accounts open for six months or more, just in case something really does need dispute.

Data point No. 3

This one is pretty simple: You can’t be dead. In other words, some proof that you haven’t usurped the account of a dead relative.

So now you know the data points you need to establish a FICO score. What if you have absolutely no credit whatsoever, no accounts at all, or if you are, in fact, dead? Well, if you’re dead you don’t need credit, so scratch that one.

Establishing data point No. 1

You need to open a credit account of some kind.  The best way to begin is to obtain a secured credit card. With a secured card, you deposit a certain amount of money with the credit card company that it will use to pay off anything you charge if you default. Now you have a card you can use, and if you pay off your balance on time, every time, you will establish a powerful baseline. The secured credit card will report your good behavior to the credit bureaus.

After six months, you’ll have met the first data point. Remember, if you can manage to get two accounts open, then you have some leeway in case a dispute situation arises.

If you can’t get a credit card, another approach is to get utility services, like gas or electric or cable TV. Credit bureaus consider your on-time, in-full payment of these services to be of value in risk management, because you receive services before you pay. You must check to see if your utility company reports those payments. Most will, but only if you’re delinquent.

Other possible accounts include installment loans and auto loans. But if you don’t have a FICO score, those may be difficult to open.

Establishing data point No. 2

This should be easy. Unless you truly have a charge you need to dispute, then don’t dispute! The most common charges to be disputed are those that slam you with a hidden recurring monthly charge. Be on the lookout for these situations.

Establishing data point No. 3

Do not die. Do not take over a dead person’s account. Even on Halloween.

At this stage, you should have a FICO score. Keep using credit responsibly and that score should rise.

Man with a question image via Shutterstock