How Length of Credit History Affects Your Score

SHORT ANSWER: Length of credit history impacts approximately 15% of your credit score, which can impact whether lenders are willing to offer you a loan.

Many factors go into calculating your credit score. One of those factors is your length of credit history. Your length of credit starts with your oldest account. Another factor is the average age of all accounts, which is where opening new lines of credit can harm your overall score despite having decades-old accounts. Learn more about how this aspect of credit impacts your account and what you can do to use it to your advantage to improve your credit score.

What is Length of Credit History?

This factor in calculating your credit score evaluates the age of your accounts within your credit reports. In other words, it is how long it has been since you established your various accounts.

When you pull your credit history from one of the major credit bureaus – Equifax, TransUnion or Experian – you can review your credit history. Here, you’ll see the age of your various accounts, such as loans, credit cards and bank accounts. 

The length of credit history differs from credit age. Length of credit history looks at how long each account has been open while the average age of accounts is your credit age. That means that the younger you are, the harder it is to reach that coveted milestone of achieving an 800 credit score because your credit age is young.

While credit age and length of credit matter, they only make up about 15% of your total credit calculation. The most important factor is payment history followed by credit utilization.

How is Length of Credit History Calculated?

Take a look at how the length of credit history is calculated so you can make more informed decisions about how to increase your credit score.

• Average age of all accounts
• Age of the newest account
• Age of the oldest account
• Amount of time accounts have been open on your credit report
• How long it has been since you used an account that is listed on your credit report

These factors come together in the credit scoring algorithm to provide your score based on your credit history and other factors. The number associated with each of these factors is a variable that will then be used in the final calculation.

How Does Length of Credit History Affect Your Credit Score?

The older your accounts, the more positive impact it will have on your credit score. While the length of credit impacts only about 15% of your total credit score, it can be a factor in helping raise your score or understanding why your score is sluggish to increase despite smart money habits.

Here’s a general calculation of how much 15% can impact your credit score.

• Fair credit: When your score is around 620, 15% is a potential 93 points you can impact with your length of credit history
• Good credit: When your score is around 700, 15% is a potential 100 points you can impact with your length of credit history
• Excellent credit: When your score is around 800, 15% is a potential 120 points you can impact with your length of credit history

So while it isn’t the largest factor in determining your credit score, it can have a major impact on your results by influencing approximately 100 of your total credit score points.

What is a Good Length of Credit History?

The deeper people get into working to improve their credit history, the more they start asking what is a good length of credit. 

Most people find that they are eligible for a credit score once they have approximately 6 months of payment history on an account. No set length of credit history magically creates a good credit score. But anything less than two years is considered a short credit history. Getting to three years of credit history will help to start raising your credit score, but five years is where most account holders see a noticeable increase in their credit score.

A FICO study found that those with excellent credit (800 or above) had an average age of accounts that was 128 months.

That’s not to say that you have to have 10.5 years of credit history to have a good credit score. Paying on time is significant when calculating your credit score as is credit utilization of under 30%. Keep in mind that late payments stay on your account for seven years, which means it is just as important to avoid late payments as it is to consider your length of credit history.

How Do You Find What Your Length of Credit History is?

To find your length of credit history, request a credit report from AnnualCreditReport.com. The top of your credit report will show the number of accounts you have open as well as the average age of accounts. It will also tell you what your oldest account is. You can review the information for each account to ensure its accuracy and to see how it might impact your credit history length.

How to Improve Your Length of Credit History

While the key to improving the length of your credit history is patience and responsible daily financial decisions, there are several things you can do now to improve your credit history.

• Don’t delay in starting to build your credit history: With so much information out there about how to impact your credit score, it can give some people analysis paralysis. Avoid spending so much time evaluating the best accounts and options that you delay building your credit history. The important thing is to start building your credit with smart moves early. Some ways people do that is by getting a secured credit card (which is a good credit card for people with no credit history) or a credit card with a small line of credit, such as a student credit card that they use for everyday spending.
• Avoid canceling credit cards: As you dig deeper into your credit history, you might feel tempted to close old credit cards. However, doing so can harm the average age of your accounts. You should only do this if you’re struggling with overspending on your credit cards or managing more than one, which leads to late payments. Another valid reason to close a credit card is paying annual fees for which you can’t maximize the benefits. Before closing an account with annual fees, see if you can transfer it to a different type of card with no annual fees so you keep your account history.
• Keep accounts active: Ensuring accounts remain active has two main benefits. The first is that it prevents creditors from closing the account, which will harm your length of credit history. The second is because FICO evaluates the last time the account was used in calculating your length of credit. If you have old credit cards where the perks aren’t as good as your newer accounts, consider charging one item per month on the card just to keep it active.
• Become an authorized user: You can use a friend or family member’s old credit card accounts to help increase your credit history. Ask them if they would consider making you an authorized user on their credit card account with a long history. They don’t even have to provide you with a card to add your name to their account. The credit card issuer will then report this update to the credit bureaus and that account will now be associated with your credit report, helping to increase your average age of accounts. Just be sure that the credit card account has a good payment history and that the individual adding you is responsible financially. Getting added to an account with late payments or credit utilization that’s above the 30% threshold will have a negative impact.

Consider All Credit Score Factors

Your length of credit history is just one factor in determining your credit score. Don’t get so hung up on it that you ignore the other factors that have a larger bearing on your score. You can only do so much to impact your length of credit, and you don’t want to let it blind you to making smart financial decisions that help prepare you for good credit moves.