How the Length of Your Credit History Affects Your Credit Score
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 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 length of your credit history. The age of your oldest account is one factor. That's based on the amount of time that's 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 length of your credit history and hurt your credit score.
Your credit score will also look at the amount of time-specific accounts that have been opened and whether you've used accounts recently. 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.
Credit History Length Affects the 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 have a history of late payments and maxed out balances.
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.
Having a young credit age doesn't mean you can't get a good credit score. 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 difficulty in establishing credit score the first time, 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:
- 18-23: 674
- 24-39: 680
- 40-55: 699
- 56-74: 736
- 75+: 758
Other Credit Score Factors
While you're working to establish a solid length of credit history, don't forget the other factors that influence your credit score. Both the types of credit you have and the number of recent applications are 10% of your credit score each.
To preserve your credit age, be careful about closing old accounts, especially your oldest credit account. An account won't fall off your credit report immediately after being closed—that can take 7-10 years depending on the account status—a closed account will impact your credit score less and less the longer that it's inactive.
If you're tempted to close an account because it contains negative history, give it time. Negative information associated with the account will fall off your credit report after seven years. The account itself—and the 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.
If you haven't used credit in several years, it's possible for all your previous accounts to have aged off your credit report. Inactive accounts are often closed by the credit card company after a certain amount of time. Without any accounts on your credit report, you won't have enough information for a credit score. Being made an authorized user on an account with a long, healthy credit history is a strategy beginners can use to boost their credit score.