How Long Is a Good Length of Credit History?
Learn how the longevity of your credit accounts influences your financial standing and borrowing power. Optimize your credit journey.
Length of credit history is important for financial well-being. This factor plays a role in your overall creditworthiness, influencing how lenders view your ability to manage debt responsibly. It is one of several components that credit scoring models use to generate your credit score, which in turn impacts access to various financial products and their associated terms. A longer, well-managed credit history can signal reliability, potentially leading to more favorable lending opportunities.
Defining Length of Credit History
The “length of credit history” is a comprehensive measure that reflects how long your credit accounts have been established and actively reported. It is a composite of several elements. These include the age of your oldest credit account, representing the longest period you have maintained credit. Another component is the age of your newest credit account, indicating recent credit activity. Finally, the average age of all your open accounts contributes to this factor, calculated by summing the ages of all your credit accounts and dividing by the total number of accounts.
Credit reporting agencies, such as Equifax, Experian, and TransUnion, track these details for each individual. When an account is closed, it does not immediately disappear from your credit report; positive closed accounts can remain on your report for up to 10 years from the date of last activity. This continued presence can still contribute to the overall length calculation, particularly for older, well-managed accounts.
Importance of Credit History Age in Credit Scoring
The age of your credit history is a significant element in credit scoring models, providing lenders with data about your long-term borrowing behavior. A longer history generally indicates a more reliable borrower, as it offers a broader record of how you have managed various credit obligations over time. Lenders and credit reporting agencies often assume that an extended period of successfully managed credit accounts suggests a higher level of responsibility compared to someone with a shorter credit background.
Credit scoring models, such as FICO and VantageScore, incorporate this factor into their calculations. For FICO scores, the length of credit history typically accounts for 15% of the overall score. VantageScore models, on the other hand, combine the length of credit history with the credit mix (types of credit used) and assign it a weight of approximately 20% to 21%. While payment history and credit utilization usually carry more weight, the length of credit history remains important.
What constitutes a favorable length varies among lenders. However, a credit history of at least seven years is often considered a good length, as it provides substantial data for assessing creditworthiness. Individuals with excellent FICO scores, for example, have shown an average age for their oldest accounts of around 30 years. The average age of accounts for those with FICO scores in the 800-850 range can be around 10.5 years. Generally, 5 to 8 years is considered “good,” with anything above 8 years often falling into the “excellent” category.
Cultivating a Strong Credit History Over Time
Building a robust length of credit history is a gradual process that requires consistent, responsible financial actions. Starting to establish credit early in life can be beneficial, as it allows more time for accounts to age. One effective way to begin is by applying for a secured credit card, which requires a cash deposit as collateral, or by becoming an authorized user on a trusted person’s credit card.
Maintaining older credit accounts is a strategy for fostering a long credit history. Even if an account is paid off or used infrequently, keeping it open helps preserve its age within your credit profile. This practice supports a higher average age of accounts, which can positively influence your credit score. Conversely, closing older accounts can potentially shorten your average account age, even though positive payment history from closed accounts can remain on your report for up to a decade.
Exercising caution when opening new credit accounts is also important. Each new account reduces the average age of your overall credit history, particularly if you have a limited number of existing accounts. Opening multiple new accounts in a short period can also lead to multiple hard inquiries on your credit report, which lenders may interpret as a sign of increased financial risk. Prioritizing consistent, on-time payments across all accounts remains the most impactful action for improving your credit score, regardless of the length of your credit history.