There are many details that affect your credit score, including how long you’ve used credit. Your credit history is relatively small compared to other credit reporting factors, such as payment history or credit utilization. However, the length of your credit history accounts for 15% of your FICO® score and about 20% of your VantageScore credit score (when combined with your “credit mix,” or the types of credit accounts you have you use them).
Having a solid credit history on your credit report can improve your credit score. This makes it a credit score category worth learning how to optimize and pay attention to.
What is your length of credit history?
The length of your credit history refers to the age of the accounts on your credit report from the three major credit bureaus: Equifax, TransUnion, and Experian. Another way to describe the length of your credit history is how long the account has been on your credit report.
To check your credit history, you can check your credit report from one or more credit bureaus. The response to the COVID-19 pandemic report will be available for free each week on AnnualCreditReport.com until the end of 2023. After that, you can get a free credit report every 12 months. You can also use a paid service like myFICO to get a deeper understanding of your creditworthiness by checking your triple credit report and FICO score.
How is the length of your credit history calculated?
There are three main factors that affect your FICO score in the credit history category of your credit report:
- Credit account opening hours. (This includes the average age of your accounts, the age of your newest account, and the age of your oldest account.)
- The time a specific account was opened on your credit report.
- How long has it been since the account was last used on your credit report?
Under the Duration of Credit History category, the FICO score model looks at your credit report and asks questions based on each of the above characteristics. For example, a scoring model might ask, “What is the average age of the accounts on my credit report?” he might ask. The answer to a question is called a variable. This variable determines how many points you earn (also called weighting), which the scoring model adds to your total credit score.
How does length of credit history affect your credit score?
The longer your credit history, the more it affects your credit score. As mentioned above, the length of your credit history accounts for 15% of your FICO score and about 20% of your VantageScore credit score (when combined with your recurring credit mix). non-recurring accounts).
15-20% may not seem like much, but this number can have a significant impact on your credit score. Here are some examples.
- If you have a good credit score of 700, 15 percent of that number is over 100 points.
- With an excellentt credit score of 800, 15 percent represents a whopping 120 points.
- Even with a fair credit score of 620, 15 percent of that number is 93 important points.
Establishing good credit can take time. So, it’s wise to get a start on the credit building process as soon as possible.
- If you have a good credit score of 700, 15 percent of that number is over 100 points.
- With an excellent credit score of 800, 15 percent represents a whopping 120 points.
- Even with a fair credit score of 620, 15 percent of that number is 93 important points.
Establishing good credit can take time. So, it’s wise to get a start on the credit-building process as soon as possible.
What is a good length of credit history?
There is no perfect “credit age,” but a FICO study found that for people with a FICO score of 800, the average age of their credit accounts is 128 months (just over 10.5 years). But that doesn’t mean it will take a decade and a half to get good credit.
New users can get a FICO score if the account’s credit report has been maintained for about six months and the payment history has been updated at least once. It takes much less time to get your VantageScore credit score. (You can get your VantageScore within a month or two of opening your account, which will appear on your credit report.)
Remember that the length of your credit history is not the only factor that determines your credit score. Your positive credit history and credit history can often make up for a young credit score. However, having older accounts in good standing will improve your score in most cases.
Additionally, negative credit report information can have a greater impact on your credit report than an early credit report or poor credit file. It can take up to seven years for most negative information to disappear from your credit report. Therefore, avoiding late payments should remain a top priority if you want to achieve a positive credit rating.
Will closing a credit card affect my score?
Many credit experts warn against closing credit cards (and for good reason). Closing a credit card can lower your credit score, but many people don’t understand why. If the account is positive when you close a credit card, the account can stay on your credit report for up to 10 years, but negative entries can disappear from your credit report sooner. As long as a closed credit card remains on your credit report, credit scoring models such as FICO will include the account in their credit history calculations. Therefore, closing a credit card should not reduce your average credit life. At least not for about 10 years on a positive account.
How to improve your length of credit history
For most people, improving your credit history requires patience. The average credit age should increase over time as the accounts on your credit report age and you avoid making mistakes. But there are some things you can do that can sooner or later help your credit history.
- Become an authorized user: A friend or family member can add you as an authorized user on their recurring credit card account. If a credit card company reports accounts to the credit bureaus for both the primary account holder and authorized users, the credit card and its history may appear on your credit report. Before your loved one adds you to their account, make sure the rest of the account’s credit history (especially payment history and credit utilization) is positive.
- Use alternate dates: Monthly utility bills, cell phone bills, and rent may not appear on your credit report. However, you may consider using a third-party service, such as Experian Boost, to add eligible accounts to one or more credit reports. If your credit report shows that a valid account was opened several years ago, you may be able to extend your credit history.
The bottom line
Having good credit can help your financial life in many ways. That’s why it’s important to know how to improve your credit score in all possible areas, including length of credit history categories. Even seemingly small credit score categories can significantly improve your overall credit score.
