Credit scores can be challenging to improve if you don’t understand what factors influence them and how they are calculated. One key factor is the length of your credit history, which accounts for approximately 15%-20% of your overall score. Many people overlook credit length, but it plays a crucial role in demonstrating your ability to manage credit responsibly over time.
The longer your credit history, the more data lenders have to assess your financial behavior. Here we’ll break down everything you need to know about credit length. We’ll discuss how it impacts your score, why it matters, and what you can do to strengthen this important aspect of your credit profile.
How Is Credit Length Calculated?
Credit length is the amount of time all of your accounts have been open. This includes the average age of your accounts, the age of your newest account and the age of your oldest account. While this accounts for 15%-20% of your score, just remember that if your score is 700, 15% is 100 points. So, you should start the credit-building process as soon as possible.
What Is a Good Credit Length?
There’s no single amount of time that constitutes good credit length and each lender may have different criteria on how they view credit length. However, a credit length of at least 7 years is usually considered a good length of time for lenders to assess your creditworthiness. Having a longer history though may be better, as it shows a long track record of good credit management. In a 2019 study of people with a perfect 850 credit score, the average age of their oldest accounts was 30 years old according to FICO.
Improving Credit History
There are no shortcuts to improving credit length, but there are things you can do to keep yourself on the right track to improving this metric. For example, keep all of your accounts open. Closing an account can shorten your credit length. You should apply for new credit strategically, as this can also impact your credit length. You also may consider becoming an authorized user on a family member’s card to increase your credit length.
If you have no credit history, improving your credit length can be a challenge. You may want to consider opening a secured card or report your rent and utility payments to credit bureaus to help establish a positive payment history.
It’s important to note that things like missed payments have a bigger impact on your credit score than a young credit history. Paying on time and keeping a low credit utilization will help you build good credit faster than the length of your credit history. But, it is still important to consider all aspects of your score if you want to make improvements and demonstrate creditworthiness. This can help you open many doors to better financial products so it’s important to optimize all aspects of your credit.
Did you know about credit length and its impact on your credit score? Share your thoughts in the comments.
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