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The age of your credit accounts and length of your credit history can directly impact your credit scores. While not necessarily the most important scoring factor, having a long history managing loans and credit cards—especially one filled with on-time payments—can help you build excellent credit.
What Is Your Length of Credit History?
Length or age of credit history refers to the age of the accounts that appear in your credit reports. Credit scoring models use various credit age-related metrics when calculating your score, including:
- The average age of your accounts
- The age of your oldest account
- How long it's been since you opened an account
As a general rule of thumb, a longer credit history is better for your credit scores. Additionally, the length of your credit history can impact the relative importance of other scoring factors—as scoring factors can be interdependent.
The credit scoring models get all this information by analyzing your credit reports from the three national credit reporting companies (Experian, TransUnion and Equifax). If you get your free credit report from Experian, we automatically calculate and show you the average age of accounts and the age of your oldest account.
What Happens When You Close an Account?
Closing a credit account or paying off a loan can impact your credit scores in several ways. However, people commonly misunderstand how and when a closed account will impact age-related scoring factors. This may be because it depends on the type of credit score and the scoring model analyzing the information.
Most consumer credit scores are produced by two credit scoring companies: FICO® and VantageScore®. For FICO® Scores☉ (the scores used by most lenders), the age-related metrics are based on both the open and closed credit accounts that appear on your credit reports. As a result, paying off a loan or closing a credit card won't immediately impact your length of credit history. It could still impact your FICO® Scores in other ways, however (more on that below).
VantageScore, on the other hand, might not include some closed accounts in its credit age calculations, depending on your credit profile and the type of account that was closed. As a result, closing the account could lower your average age of all accounts, and may hurt your VantageScore credit scores.
With scores from both FICO® and VantageScore, the payment history that's part of closed accounts can continue to impact your credit scores as long as the accounts appear in your credit report. For example, if you made on-time payments before the account was closed, that could help your credit. If you missed payments, however, those negative marks could continue hurting your credit until the closed account falls off your credit report.
Closed accounts can stay on your credit reports for up to 10 years if you never missed a payment. If you missed a payment and then brought the account current before it was closed, the late payment will be removed after seven years, but the account can still stay for 10. However, if your account was delinquent when it was closed, the entire account will be removed seven years after the account's original delinquency date.
How to Improve Your Length of Credit History
Improving the length of your credit history often requires a little action and a lot of patience.
If you don't have any credit accounts, you'll want to open new accounts so you can start building your credit history. Because getting new credit when you have none can sometimes be challenging, credit-builder loans and secured credit cards are often a good place to start. Having several accounts can also be better than only having one account on your credit report, as long as you manage them responsibly and always make on-time payments.
Once you have open accounts, you'll need to be patient as they slowly age over time. One potential shortcut is to become an authorized user on a family member's credit card. As an authorized user, you get the benefit of the primary cardholder's credit history with the card and can use the card to make purchases (if the primary account holder agrees). As long as the primary cardholder pays all the bills on time and keeps a low balance, your credit scores can benefit.
Just be sure the credit card issuer reports authorized user status to the credit reporting companies so the account is included on your credit report—not all do. Or, if you're the one with an old credit card, you might want to help a spouse or child with their credit by adding them as an authorized user on your account.
Considering how long it can take to build a long credit history, you might not want to frequently apply for new loans or credit cards. Each new account you open will lower the average age of your accounts.
However, if you need a loan or see a great credit card offer, don't let length of credit history keep you from applying. While age-related factors can impact your credit scores, they're not as important as other scoring factors. FICO® says its length of credit history category only accounts for about 15% of the average person's FICO® Score. Similarly, VantageScore gives its age of credit history a "less influential" weighting.
What Other Factors Affect Your Credit Scores?
Your credit scores are determined by complex scoring algorithms that analyze many aspects of your credit reports. The most important factors are typically your payment history and your credit usage.
- Payment history includes whether you've made on-time payments, missed payments, had accounts sent to collections or filed for bankruptcy. Having a long history of on-time payments is best for your scores.
- Credit usage includes the number of accounts you have with balances and how much debt you still have to repay on loans. But it primarily depends on your credit utilization ratio—how much of your available credit you're using on revolving accounts, mainly credit cards. Using only a small portion of your available credit is best for your credit scores.
If you want a good credit score, focus on the most important categories while being mindful of the less important ones. In general, try to:
- Have a few open accounts that are reported to the credit bureaus.
- Make all your monthly payments on time.
- Only use a small portion of your revolving accounts' credit limits.
- Don't apply for or open too many new accounts.
Over time, all of these actions can work together to help you earn an excellent credit score.
Monitor Your Credit for Free
Checking your free Experian credit report can give you a snapshot of what's on your credit reports and the age of your different accounts. You may also want to regularly monitor your credit report, which you can also do for free. The alerts can warn you about potential fraud, letting you respond promptly, and the insights can teach you about the different steps you can take to improve your credit scores.