Whether you’ve had credit for six months or 20 years can make a difference in your credit scores.
A long track record without any major slip-ups suggests that your credit behavior will be similar in the future — and lenders and credit card issuers like that.
Credit scoring company VantageScore combines two things in its 3.0 scoring model — how long you’ve been using credit and what types of credit you have — into a single factor and considers it “highly influential.” FICO credit scores break it out a little differently, with the length of your credit history accounting for 15% of your score and the mix of accounts making up 10%.
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The "length of credit history" means how long any given account has been reported open, says Rod Griffin, senior director of public education and advocacy for Experian, one of the three major credit bureaus.
“Generally, the longer an account has been open and active, the better it is for the credit score," Griffin says. "That’s particularly true for an account with a positive payment history that has no delinquency.”
The credit scoring algorithms calculate the average of how long all your accounts have been open. That average age of accounts is your “credit age.”
It’s all but impossible to get a score higher than 800 if you’re young, because your credit age likely will be low.
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While credit age matters for credit scoring purposes, the only thing you can do about it is to keep your credit accounts in good standing and avoid closing credit cards unnecessarily.
Being an authorized user on an old, established account in which the primary cardholder has excellent credit may help your score a little, but the passage of time during which you build or maintain good credit helps the most.
Keep length of credit history in perspective, though: It’s only one element influencing your credit scores, and not the most important one at that. Here's a breakdown of the factors that affect your credit scores:
The biggest effects on your credit scores come from:
Payment history — making sure that you pay all bills on time.
Credit utilization — using no more than 30% of your credit limits, and less is better.
If you use credit regularly and lightly, and pay your bills on time every month, you’re doing the two essential things to have a good credit score. Sit tight and the average age of accounts will take care of itself.
Whether you've had credit for six months or 20 years can make a difference in your credit scores. A long track record without any major slip-ups suggests that your credit behavior will be similar in the future — and lenders and credit card issuers like that.
Although the length of your credit history only accounts for 15% of your FICO® Score, it's still an important influence on lenders. It can definitely impact the chances of whether or not you get a loan.
Anything less than two years is considered a short credit history. Once you have established between two and four years of credit, lenders will better understand how well you manage your credit accounts. A credit age of five years will raise your score as long as you've been managing your accounts well.
A good credit score doesn't come quickly. Excellent credit requires seven years of open credit accounts and on-time payments. Here's why, and what you can do to manage your finances while working to build good credit.
While six months is the minimum age before you're fully scorable, that's the bottom of the range -- way at the bottom. Most lenders (and scoring models) consider anything less than two years of credit history to be little more than a decent start.
The length of your credit history can significantly impact your credit score and whether or not you qualify for a new credit card, loan or new line of credit. According to FICO, a longer credit history, including the average age of accounts, will help boost your score.
According to the Fair Credit Reporting Act (FCRA), negative items can appear on your credit report for up to 7 years (and possibly more). These include items such as debt collections and late payments. The time frame begins from the original date of the delinquency (the date of the missed payment).
They also look for any negative items in your credit history that could automatically disqualify you from getting a mortgage loan. If you are building your credit from scratch, then two years of the right credit behaviors and credit history should be enough to help you qualify for a home loan.
Starting with zero credit history, you can establish credit in as little as six months. Achieving a "good" credit score of 700 or better usually requires making timely payments for at least 18 months to two years, but it's possible to find shortcuts.
Specifically, section 609 of the FCRA gives you the authority to request detailed information about items on your credit report. If the credit reporting agencies can't substantiate a claim on your credit report, they must remove it or correct it.
Correct information cannot be removed and stays on file for at least seven years. So, if your score is low due to accurate negative information, you'll need to repair your credit over time by making payments on time and decreasing your overall amount of debt.
The latest credit score data is in and as of October 2023, the national average FICO® Score now stands at 717. This is one point lower than it was earlier in 2023 and reflects the first time the metric has decreased in a decade as shown in Figure 1.
In the case of serious credit infringements, if the debt is paid it will be removed from your credit report if it is more than 5 years since it was listed or it will revert back to a default and be held for a maximum of 5 years from the date it was listed.
Highlights: Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type. Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years.
What's in my FICO® Scores? FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
What's a good credit score for a 20-year-old? Consider yourself in “good” shape if your credit score is above the average for people in your age group. Given that the average credit score for people aged 18 to 25 is 679, a score between 679 and 687 (the average for people aged 26 to 41) could be considered “good”.
Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.
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