Things You Should Know About Credit History

One component of your credit score is your credit history, also known as credit age. The longer history of consistently paying bills on time that you can show lenders, the better off you are.

Common Credit History Questions

Let’s answer some questions you might have about credit history, credit age, and how it impacts your credit score.

What Does Length of Credit History Mean?

Length of credit history — also called credit age — is how long the accounts on your credit report have been open.

How Credit History is Calculated

The length of credit history is calculated a few ways:

• The age of your oldest account.
• The age of your newest account.
• The average age across all your accounts.

How Length of Credit History Affects Your Score

The longer your credit history, the better it is for your score — this factor makes up 15% of your FICO Score and 21%* of your VantageScore.

A longer history gives lenders more data to see how you’ve handled credit over time, which is why it carries real weight in both scoring models.

Why Credit Mistakes Hit Harder on a Thin File

If your credit file is new or thin, mistakes cost you more than they would someone with a longer history because there’s less positive history to balance them out. Here’s what matters most, in order:

• Pay on time, every time. This matters more than usual on a thin file with only one or two accounts. A single late payment has less positive history to offset it, so it can hit harder than it would on an established file.
• Keep your utilization low. On a thin file, one card carries more weight. If your only card has a $500 limit and you’re using $400 of it, that’s 80% utilization. A file with more accounts and history can absorb a high-utilization month better than a thin one can.
• Be careful opening new accounts. A new account lowers your average account age and adds a hard inquiry. If your average credit age is one year, one new account can cut that average in half.
• Keep old accounts open. Closing an account can lower your total available credit and shorten your average account age. Both work against you.
• Limit credit inquiries. Each application for new credit adds a hard inquiry, which has an outsized effect while your file is still thin.

The Upside. Thin files that stay on track also improve and recover faster than older files do.

Should You Close Old Credit Cards?

In general, keep old credit cards open, even the ones you don’t use. Closing a card lowers your total available credit and can shorten your average account age, both of which can hurt your score.

What About Annual Fees?

If an unused card has an annual fee, you’ve got two reasonable options:

• Cancel it and accept that your score may take a temporary hit.
• Call the issuer and ask to move to a no-fee version of the same card.

The second option lets you keep the account and the credit history that comes with it without paying to maintain it.

Do This Now: If your credit file is thin or new, set up autopay on every account today. It’s the single easiest way to protect the one thing that matters most while your credit history builds: a clean, on-time payment record.

*Based on VantageScore 3.0