When it comes to your credit score, age is more than just a number. The length of credit history has a direct effect on your credit score. You're a much better candidate for credit cards and loans when you've had credit for a long period of time and if that long credit history is positive.
Your credit report—the compilation of your credit history—must contain at least one account that has been active for at least six months for a credit score to be generated for you. Otherwise, there's not enough information to generate your credit score.
What Determines the Length of Credit History?
Credit scoring calculations look at a few different factors to determine the technical length of your credit history. The age of your oldest account is one factor. That's based on the amount of time that has passed since you opened your first credit account.
The length of time since your newest account was opened and the average age of all your accounts are also factored into the length of credit history. Several recently opened accounts can lower your average credit age, shorten the technical length of your credit history, and hurt your credit score.
Whether or not you use your credit accounts relative to their age is also factored into your credit score. Being active with your credit is helpful for the length of your credit history. Old accounts that are inactive may not have a major impact on your credit score.
How Much Does Credit Length Affect Credit Score?
FICO and VantageScore, two of the most widely used credit scores, treat credit age a little differently, but it's still a critical factor in both credit scores. Typically, the longer a person has had credit, the higher their credit score will be, granted they don't have a history of late payments, maxed-out balances, or other negative factors.
With your FICO score, the length of your credit history is 15% of your credit score. VantageScore 4.0 combines age and credit mix into a single factor that's 20% of your score.
If you're new to credit, don't worry too much about starting from scratch. Having a young credit age doesn't mean you can't get a good credit score. Focus on the factors you can control, and your score will build with time.
Payment history and level of debt have a bigger impact on your credit score than the length of credit history. If you're responsible with your credit card payments and keep your debt at a reasonable level, you can achieve a high credit score. You shouldn't expect to get an 800 credit score within the first few months of establishing your credit, but you can achieve a credit score high enough to qualify for most credit cards and loans.
Credit Age vs. Real Age
While your actual age isn't a factor in your credit score, there is some correlation between credit scores and chronological age. Younger Americans tend to have lower credit scores. This is partly due to the initial difficulty in establishing credit score, especially for consumers between 18 and 21. Having a shorter credit age can also contribute to the lower credit scores among young adults. They simply haven't had enough time to establish a significant credit history length.
Experian credit score data from 2020 shows how credit scores can improve with age:
|Average Credit by Age|
Managing Old Accounts
To preserve your credit age, be careful about closing old accounts, especially your oldest credit account. Remember, the longer you have had credit, the greater the impact on your overall score.
If you're tempted to close an account because it contains negative history, give it time. Firstly, an account won't fall off your credit report immediately after being closed—that can take seven to 10 years depending on the account status—and a closed account will impact your credit score less and less the longer that it's inactive.
Dings to your credit report won't last forever. Credit reporting agencies generally look at your activity of the last seven years, with some exceptions for extreme instances such as bankruptcy. Rest assured that most negative information associated with your account will fall off your credit report after seven years.
The account itself and its associated credit age will remain on your credit report. If you can save your older account from more serious delinquency, like a charge-off, it's generally better to keep it open.