How the Length of Your Credit History Can Affect Your Credit Score

The length of your credit history is a significant factor in your credit score. A longer history provides lenders with more data to assess your reliability, generally leading to a better score.

1. Starting Point:When you open your first credit account, the clock starts on your credit history. Initially, with a "thin file," your score can be more sensitive to new activity.
2. Early Growth:In the first few years, the average age of your accounts is low. Each new account you open will noticeably decrease this average, which can temporarily lower your score.
3. Maturing History:As your accounts age past the five-to-seven-year mark, your credit history is considered mature. This demonstrates stability and a longer track record of managing debt to lenders.
4. Veteran Status:A history spanning a decade or more is highly influential. It shows extensive experience and long-term financial reliability, which is heavily favored by credit scoring models like FICO and VantageScore.
5. Maintaining Age:To capitalize on this factor, it's wise to keep your oldest credit accounts open, even if they are not in active use. Closing an old account can lower the average age of your history.

How Much Will the Length of Your Credit History Affect Your Credit Score?

When evaluating how the length of your credit history affects your score, consider these key factors:

• Scoring Model Weight: The length of your credit history typically accounts for 15% of your FICO Score. While not the largest factor, it plays a significant role in your overall credit health.
• Average Account Age: Lenders consider the average age of all your accounts, not just your oldest one. A higher average age demonstrates a longer, more stable history of managing credit responsibly.
• New Credit Impact: Opening several new accounts in a short time can lower your average account age. This may temporarily decrease your score, so it's wise to apply for new credit sparingly.

How You Can Avoid the Length of Your Credit History Affecting Your Credit Score

Become an Authorized User

One effective strategy is to become an authorized user on an older, well-managed credit card, often belonging to a family member. This can graft their long-standing, positive credit history onto your report, which may help lengthen your own credit history average.

Keep Old Accounts Open

Avoid closing your oldest credit accounts, even if you no longer use them frequently. Closing an old account can shorten the average age of your credit history and potentially lower your score. A small, occasional purchase can keep the account active and beneficial.

Utilize Secured Credit Cards

Secured credit cards are an excellent tool for building credit from scratch. While they don't instantly add age to your history, they establish a positive payment record. Consistent, on-time payments demonstrate creditworthiness, which can help offset the impact of a shorter history.

Ways to Improve Your Credit Score

Improving your credit score is an achievable goal that can significantly boost your financial health. With consistent effort and the right strategies, you can build a stronger credit profile, often seeing meaningful changes within three to six months.

• Monitor your credit reports. Regularly check your reports from the major bureaus to identify and dispute any inaccuracies that could be dragging down your score.
• Set up automatic bill payments. Your payment history is the most significant factor in your score, so setting up automatic payments or reminders is crucial to avoid late fees and negative marks.
• Reduce your credit utilization. Aim to use less than 30% of your available credit, as a lower credit utilization ratio signals to lenders that you are a responsible borrower.
• Become an authorized user. Being added to the credit card of someone with a strong payment history can help improve your score, as their positive account activity will appear on your report.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards (revolving credit) and loans (installment credit).
• Limit hard inquiries. Avoid applying for too much new credit in a short time, as each application can trigger a hard inquiry that may temporarily lower your score.

The Bottom Line

While not the most heavily weighted factor, the length of your credit history does influence your credit score. A longer history, maintained by keeping old accounts open, is generally beneficial.

Frequently Asked Questions

How is the length of my credit history calculated?

Lenders look at the age of your oldest account, your newest account, and the average age of all your accounts combined to determine your credit history length.

Will closing an old credit card hurt my score?

Yes, it can. Closing an old account lowers the average age of your credit history, which is a key factor in your score. Consider keeping it open.

Can I have a good score with a short credit history?

Absolutely. While a longer history helps, consistently paying bills on time and keeping credit utilization low are more impactful factors for building a strong credit score quickly.