Credit Age: How Does It Affect Your Credit Scores?
A good credit score can make it easier to get approved for loans and pay the lowest interest rates while you’re at it. Your credit age, or the length of your credit history, plays an important part in shaping your scores.
While credit age doesn’t carry as much weight as payment history or credit utilization, it’s still important to understand how credit history impacts your credit score.
What Is a Credit Age?
Your credit score is a three-digit number that reflects how responsible you are when managing debt. A key part of that calculation involves your credit age, which is the average age of all your credit accounts.
Credit age measures the length of your credit history. In other words, how long you’ve been using different types of credit, including:
- Revolving debt, such as credit cards
- Installment debt, such as personal loans
For individual credit accounts, credit age measures the length of time they’ve been open.
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How Credit Age Affects Your Credit Score
Both the FICO and VantageScore credit scoring models consider credit age, including the age of your oldest credit account and your newest, as well as the overall length of your credit history.
VantageScores refers to it as “depth of credit” and it covers both how long you’ve been using credit and the types of credit used. It ranks as the second-most influential credit scoring factor after payment history.
FICO credit scores, which are used by 90% of top lenders in borrowing decisions, are based on five factors, though they aren’t treated equally. Instead, credit scores are weighted along these lines:
- Payment history: 35% of your score
- Credit utilization: 30% of your score
- Credit age: 15% of your score
- Credit mix: 10% of your score
- Credit inquiries: 10% of your score
As you can see, credit age takes a backseat to payment history and credit utilization, in terms of how it’s treated for FICO credit scoring. But it carries more weight than the mix of credit types you’re using or how often you apply for new credit.
For both VantageScores and FICO credit scores, a longer credit age generally works in your favor more than a shorter one. The older your credit accounts are and the more credit history you have, the better lenders are able to assess your creditworthiness. Someone with a lengthy credit history may be more likely to have a higher credit score than someone who hasn’t been using credit as long.
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Why Credit Age Matters When Borrowing
When you apply for a personal loan or any other type of credit, lenders can review both your credit scores and your credit report. Your credit report is essentially a snapshot of all the various credit accounts you’ve had over time.
A higher credit score can translate to easier approval for loans or lines of credit. At the same time, lenders may be more inclined to offer you a lower interest rate when you borrow.
Lower interest rates mean more money saved when taking out loans or lines of credit. A longer payment history can help demonstrate to lenders that you have experience with using and credit and that you’ve done so responsibly in the past.
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How to Improve Your Credit Age and Credit History
Both VantageScores and FICO scores max out at 850, which is considered a perfect credit score. Having a score in the excellent to perfect range can put you in the best position when borrowing if you hope to lock in the best rates.
If your credit score isn’t as high as you’d like it to be, improving your credit age is one thing you can work on. These tips can help you to make a positive change in your credit score:
- Keep older credit accounts open. Older credit accounts are good for your credit age, so before you’re tempted to close them consider how it could impact your score. Closing accounts with an outstanding balance can also shrink your credit utilization ratio, costing you credit score points.
- Be mindful of how often you open new accounts. Opening new credit accounts could hurt your credit score in more ways than one. First, it can reduce your average credit age. Aside from that, each new inquiry for credit can knock a few points off your score.
- Pay on time. Payment history accounts for the largest share of your credit score, so it’s important to pay on or before the due date consistently. And the longer your accounts are open, the more positive payment history you can add to your credit report.
Check your credit reports regularly to look for any errors or inaccuracies that might be negatively affecting your score, especially for your oldest credit accounts. If you spot any inaccurate information, you can dispute credit report errors with the credit bureau that’s reporting it to try and have it corrected or removed.
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Rebecca Lake is a freelance writer specializing in personal finance,
credit and debt. She’s a contributor to U.S. News and World Report,
Forbes Advisor and The Balance and her work has appeared online at CreditCards.com,
Money-Rates.com and dozens of other top publications.