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According to Experian 2021 data, the Silent Generation continues to have the highest average credit score (760) of any age group. This is 20 points higher than Baby Boomers (740) and 74 points higher than Millennials (686).
But you don’t have to be a credit veteran to have a great credit score.
To receive a FICO credit rating, borrowers must have at least some credit history. While this is not the most important factor used to calculate a borrower’s FICO score, the length of a borrower’s credit history does matter.
“In general, the older your credit history is, the better it is for your FICO score,” said Barry Paperno, a credit scoring expert who has worked for FICO and Experian.
Here’s what you need to know about credit history length and why it’s important.
What is the length of credit history?
The length of your credit history mainly depends on how long you have been using credit, and it accounts for 15% of your FICO score. FICO breaks down “length of credit history” into three components:
- How long have the accounts been open
- How long certain types of accounts have been open
- How long has it been since these accounts have been used
“The minimum amount of credit history required to receive a FICO score is six months or more on at least one credit account,” Paperno said.
This means that a consumer who opened their first credit card three months ago and had no other loans would not yet receive a FICO score, no matter how responsibly they treated this card.
What is a good credit history length?
Generally speaking, the longer the better. The more years you have between you and your first (successful) credit card application, the more your account will benefit.
However, as you add more credit, your average will decrease. While there is no golden number to aim for, getting an average loan age of six to ten years is probably a good goal.
“It’s entirely possible for someone with a relatively short credit history to have the same score as someone with a 30-year credit history,” said Rod Griffin, senior director of community education at Experian. “It’s about how you manage the credit you have. Of course, you have to have some length of history so that scores can be calculated.”
How to improve your credit history
While there are a number of steps you need to take to build other aspects of your credit score, you really don’t have much control over the length of your credit history. It just takes time.
Closing an account is one of the main things that can affect your credit history. However, even that will take some time. Closed accounts that have always been paid on time remain on credit reports for 10 years from the date of closure, and accounts in arrears remain for seven years from the date of first delinquency.
Thus, it will take some time for your credit history to be affected. However, closing an account can have a much more direct impact on your usage rate by reducing your available credit.
Opening a new account can also affect your credit history by lowering your average score. However, the growth from increased credit usage, credit combination and, when used responsibly, a positive payment history will likely far outweigh any impact on your credit history, which is a much smaller percentage of your score.
bottom line
The length of your credit history is a moderately important factor in your credit score; however, this is largely out of your control. A closed account will remain on your credit report for up to 10 years, so it will continue to contribute to your history long after you make changes.
Opening new accounts will decrease your average credit age, but will likely have a larger positive impact on other credit rating factors. If you keep your accounts open, pay them on time, and keep your balance as low as possible, your credit will age gracefully and your account will stand the test of time.
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