{"id":18247,"date":"2021-02-04T19:00:00","date_gmt":"2021-02-04T11:00:00","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/credit-score-in-20s.html"},"modified":"2026-03-26T16:02:01","modified_gmt":"2026-03-26T08:02:01","slug":"credit-score-in-20s","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/debt-credit-score\/credit-score-in-20s.html","title":{"rendered":"I\u2019m Only 21 Years Old. Do I Need A Credit Score?"},"content":{"rendered":"\n

Most of us are unaware of how important it is to start building our credit scores early in life. We only realise this 3-digit number plays a vital role in getting our bank loans and credit card applications approved later on. Read on to find out why you should start establishing your credit score at a young age.<\/strong><\/p> \n

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Isn\u2019t it awesome to be 21? You might be at the final stages of your university education, or you could be starting a career. Even in the pandemic era, the world is filled with endless possibilities. There are still university degrees to be earned, career ladders to be climbed, startup ideas you\u2019ll want to realise, and many, many more things that you wish to accomplish. Bursting with energy and eager to adapt to the new normal, you can\u2019t wait to begin this new chapter in your life: adulthood.<\/p> \n

Adulthood comes with a new set of financial responsibilities, as you might be purchasing your first car, health insurance and other necessities soon. There will be a time when you have to navigate through your first bank loan<\/a> application (most likely, to pay for your further studies or buy a car) and credit card<\/a> application (perhaps, as a financial backup during emergencies).<\/p> \n

During these applications, you may be wondering about how banks decide if you\u2019re qualified for a loan\/credit card. Since these financial institutions don\u2019t know you well enough to gauge your financial health, they refer to something called \u201ccredit scores<\/a>” to gain a better understanding of the potential risks that come from lending money to you. <\/p> \n

\u201cHold on. I\u2019m only 21. I\u2019ve never borrowed money in the past. Why should there be any risks?\u201d <\/h2> \n

That\u2019s a question that may have crossed your mind. True, you might have never borrowed money previously, so you\u2019ll have no credit history<\/a> (a record of your ability to pay off credit card bills, loans and other debts). These records will appear in the credit reports generated by credit reporting agencies<\/a>. Based on your credit reports, the agencies will then calculate your credit score.<\/p> \n

As you have no credit history, and thus no credit score<\/a>, banks may perceive you as an inexperienced credit consumer<\/strong> with no proven record of repaying money. So it might be harder to qualify for loans, and if you do, there\u2019s a chance that you could end up servicing a higher interest rate.<\/p> \n

That\u2019s because when banks review your credit report<\/a> and credit score, they\u2019re interested in how reliably you pay off your debts in full and on time. (Your past payment performance is usually considered a good predictor of your future payment behaviour.)<\/p> \n

You\u2019ll be hearing more about credit scores throughout your life, especially when it\u2019s time to get financing for that sleek coupe you\u2019ve always wanted to own and drive, a gorgeous home for your new family, and even to build your dream company.<\/p> \n

In a sense, having a good credit score is like the key that opens doors to some of the best financial deals in life \u2013 including favourable interest rates, premium credit cards, and a higher chance of getting your loan approved.<\/p> \n

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If you have no credit history, and thus no credit score, banks may perceive you as an inexperienced credit consumer with no proven record of repaying money.<\/em><\/p> \n

\u201cOkay, so how are credit scores calculated?\u201d<\/h2> \n

Your credit score will fall within the range of 300 and 850. Credit reporting agencies have different formulas to calculate<\/a> your score, but the evaluation is generally based on these factors:<\/p> \n