Credit Score Scale Factors: Length of Credit History

Credit Score ScaleWe’ve talked about how your payment history and amounts owed affect your FICO score. Now in part 3 of this series, we’ll talk about length of credit history and how it affects your credit score.

Length of credit history is the third most important factor, accounting for 15% of your FICO score. This category looks at how long you’ve had your open accounts and evaluates that time period based on the kind of accounts you have.

FICO’s math is a trade secret, but we know they look at the age of your longest-standing account, the age of your most recent account, and a computed average of all of your accounts’ ages. FICO computes this average twice: once based on all of your accounts, and again based on all of your revolving accounts.

Ultimately, this is another one of those credit scoring areas where time has the most impact. There are no shortcuts to improving the “length of credit history,” but you can avoid hurting this part of your score by refraining from opening new accounts that will lower the average age of your credit history.

Another factor in the length of credit history is the amount of time since your last activity. If you go six months with no open accounts and no activity, you may not have a FICO score at all. A closed credit account is reported for 10 years after the account is closed, but there must be some credit activity within the last six months for there to be a FICO score at all.

Remember that at 15%, this factor doesn’t have the greatest impact on your score, so if you’re still trying to build credit, it’s okay to apply for new accounts and to try to get better terms by switching to new creditors. Just be aware that you want to keep your longest-standing account open to boost the overall average age of your accounts.

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This post is part of the Credit Score Scale Factors, a series of articles and resources designed to prepare people to become informed and responsible credit holders. View the rest of the articles here.