How length of credit history affects your credit score

There are many components influencing your credit score, including how long you’ve been using credit. Your length of credit history is somewhat minor compared with other credit score factors like payment history or credit utilization. But length of credit history accounts for 15 percent of your FICO score and around 20 percent of your VantageScore credit score (in combination with your “credit mix,” or the types of credit accounts you use).

Having a solid length of credit history on your credit report has the potential to improve your credit score. That makes it a credit score category worth paying attention to and optimizing. After all, having a strong credit score opens the door for better financial products in your future, including access to top credit cards, better interest rates on loans and even lower insurance rates.

What is your length of credit history?

Length of credit history describes the age of the accounts on your credit reports with the three major credit bureaus: Equifax, TransUnion, and Experian. Another way to describe length of credit history is the period of time the accounts on your credit reports have been established.

If you want to review your own length of credit history, you can do so by checking your credit report from one or more of the credit bureaus. Free weekly credit reports are available through AnnualCreditReport.com. You can also use paid services like myFICO to monitor your three credit reports and your FICO score for a deeper look at your credit information.

What’s the difference between length of credit history vs. credit age?

Length of credit history and credit age sound pretty similar — and they are — but there’s a key distinction separating them.

Your credit age is calculated by averaging the ages of your open credit accounts. You’ll usually see this in reference to the VantageScore credit scoring model when it gets tossed in with your credit mix, which is also known as your depth of credit.

Meanwhile, length of credit history has a more complex calculation and is associated with the FICO scoring model.

How is the length of your credit history calculated?

Three primary factors impact your FICO score within the length of credit history category of your credit report.

• The amount of time your credit accounts have been open. This includes the average age of your accounts, the age of your newest account and the age of your oldest account.
• The amount of time specific accounts have been open on your credit report.
• How much time has passed since you last used the accounts on your credit report.

Within the length of credit history category, a FICO scoring model will review your credit report and ask questions based on each of the characteristics above. For example, a scoring model might ask, “What is the average age of accounts on your credit report?” The answer provided determines the number of points you earn — aka the weight — which the scoring model then adds to your overall credit score.

How does length of credit history affect your credit score?

Credit reporting agencies and lenders tend to assume that the longer you’ve successfully managed your credit accounts signals a higher level of responsibility than someone who just started. In a 2019 study of people with a perfect 850 credit score, the average age of their oldest accounts was 30 years old according to FICO. So the older your length of credit history, the better the impact tends to be on your credit score.

As mentioned, length of credit history is worth 15 percent of your FICO score and around 20 percent of your VantageScore credit score (when combined with your credit mix of revolving vs. non-revolving accounts).

Although 15 to 20 percent might not seem significant, those numbers can make a meaningful impact on your credit score. Here are some examples.

• If you have a good credit score of 700, 15 percent of that number is over 100 points.
• With an excellent credit score of 800, 15 percent represents a whopping 120 points.
• Even with a fair credit score of 620, 15 percent of that number is 93 important points.

You don’t need three decades of credit history to make solid improvements to your credit score. But establishing good credit does take time. There’s no shortcut to improving your length of credit history unless you have a time machine, so it’s wise to get a start on the credit-building process as soon as possible.

What is a good length of credit history?

Folks with perfect credit scores typically have lengthy credit histories with decades of responsible use, but that doesn’t mean you’ll have to wait forever to build good credit.

Those working to build credit for the first time might have no FICO credit score until an account on their credit report reaches six months old with payment history that’s been updated at least once. VantageScore takes even less time. You might qualify for a VantageScore credit score within a month or two of opening an account and having it appear on your credit report.

Keep in mind that length of credit history isn’t the only credit scoring factor that matters. Your positive actions with regard to payment history and credit utilization can often make up for a younger credit age. Still, older accounts in good standing tend to help your score in many situations. For instance, closing an old credit card has a higher impact on your credit score because it increases your credit utilization — not because it reduces your average credit age.

Plus, negative information on your credit report can have a bigger impact on your credit score than a young credit report or a thin credit file. It takes seven years for many types of negative information to age off of your credit report. As a result, avoiding late payments should remain a priority when you’re working to earn a positive credit rating.

That said, beginning to build your credit history should ideally begin before you need to think about things like interest rates on a mortgage or car loan. Becoming an authorized user on a trusted person’s credit card or opening a student credit card are easy ways to get started.

The bottom line

Earning good credit can benefit your financial life in many ways. And while you’re able to improve most aspects of your credit score, there aren’t many ways to fast-track your way to a  long credit history. So, it’s worth learning how to maximize your credit score in every area possible, alongside your length of credit history. Your starting credit score may pale in comparison to someone with years of credit experience, but if you consistently display positive actions on your credit accounts, you can build good credit in what feels like no time.