The length of your credit history has a significant impact on your credit score. In fact, the longer you have been using and maintaining a credit card account, the better it is for your scores. The average American adult with good to excellent credit has at least 8 years of history in their file! That’s why it’s so important to maintain an active account if you want to see that high number when you check your credit score.
What Is Your Length of Credit History?
Your length of credit history is the number of years you’ve had a line of credit and your payment history. For example, if you have been paying on time for 12 months, then that’s 1 year in credit length. The average person has 15 years’ worth of credit history which means they have an A- rating. If someone has not paid their bills on time or does not have any lines of credits, then this will be reflected in their length of credit score which would mean they are less likely to get approved for loans or other types of lines like a phone contract with different carriers such as Tmobile because the company needs to make sure you can afford it and pay them back.
What Happens When You Close an Account?
The primary factor that determines your creditworthiness is the age of your accounts, and if you’re closing an old account. The next thing that affects your credit score is the amount of debt owed on each card as well as any delinquencies in payment history. Generally speaking, it’s best for someone with fair or poor credit (below 620) to keep all their cards open because one missed payment can cause a lot of damage to their score. Closing old accounts could also lead to less available credit which would make life more difficult.
How to Improve Your Length of Credit History?
The average length of credit history is 10 years, and the median is 8. Credit histories that are longer than 10 years are more likely to be approved for loans, mortgages, credit cards, and other types of financing. So how can you improve your length of credit history?
A few ways include opening or being an authorized user on a credit card in order to use it responsibly; making payments on time every month; paying off debt when possible so it doesn’t accumulate interest over time; checking your free annual report from all 3 major reporting agencies (Equifax, Experian, TransUnion) for errors or inaccuracies. In general, the more responsible you are with your finances – including maintaining a good length of credit history – the better off.
What Other Factors Affect Your Credit Scores?
Your credit scores are determined by complex scoring algorithms that analyse many aspects of your credit reports. The most important factors are typically your payment history and your credit usage.
Payment history: Payment history is the most important factor in determining your credit score. You should make all of your payments on time and avoid any late or missed payments. If you do, then you will have a higher credit score than before. Your payment history has long-term effects on your ability to borrow money for things like mortgages and car loans.
Credit usage: It’s important to learn how to use your credit wisely. It can be tempting to utilize it all at once, but this might not be the best option in the long-term. With an understanding of what constitutes good usage and bad usage, you’ll be able to make better decisions about your financial future.
