Length of credit history how much

Each time you open a new credit account, you risk lowering your average age of credit history. You also reset the clock on the credit age of your youngest accounts. Either of these actions might have a negative impact on your credit score. On a positive note, as you show over time that you can manage your new account well, any negative score impact will decrease.

Exercise caution anytime you consider closing a credit card account. Canceling a card will not automatically lower your average age of credit as some believe. But the account closure could damage your credit score for another reason — it might increase your credit utilization ratio. The closed account will still remain on your credit report.

As long as the account appears on your report then, closed or open, it will count toward your average age of credit. The credit bureaus remove most negative accounts from your credit report after around seven years. They remove positive, closed accounts after ten years. Once an account drops off your credit report, scoring models will no longer consider the age of the account or any other account details, for that matter.

If the account removal results in a lower average age of credit at that time, your credit score might dip downward. Learning how different actions, like opening new accounts, can affect your credit score is an important key to earning and maintaining a good credit rating. You can check your credit report for free once every 12 months thanks to the Fair Credit Reporting Act.

Your free reports are available at AnnualCreditReport. First, you can monitor your credit reports for errors and fraud which, unfortunately, do happen. Reviewing your reports often can also keep you focused on the smart steps you need to take to keep your credit in the best shape possible. Michelle L. Black is a leading credit expert with over 17 years of experience in the credit industry. See Michelle on Linkedin and Twitter. See Lauren on Linkedin and Twitter.

However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. A long track record without any major slip-ups suggests that your credit behavior will be similar in the future — and lenders and credit card issuers like that.

The "length of credit history" means how long any given account has been reported open, says Rod Griffin, senior director of public education for Experian, one of the three major credit bureaus. But that's not all there is to see. For example, having one old account and a dozen new ones could tell an entirely different story. So, creditors will look at both your overall history and your average account age to get the whole picture.

This aspect of your score is pretty straightforward, as it simply looks at your single oldest account. This is a great reason to hang on to your first credit card. And it's even better if it's a no-annual-fee card you can leave open without any costs. However, if you do wind up closing an old account, it won't necessarily hurt your credit history age right away.

Accounts closed in good standing can stay on your credit reports for up to 10 years. This part of your score looks at the average age of your accounts, across all of your accounts. To determine the average age, you simply add up the age of each account, then divide by the total number of accounts.

As an example, say you have three credit cards , each with the following ages: Card A: 24 months, Card B: 12 months, Card C: 3 months. Added up, you get a total of 39 months. Each new credit card you open will get added into the mix, which will reduce your average account age. Too many new accounts can cause your average to drop significantly. Like your overall age, an older average account age is better, so it's a good idea to spread out your new applications to give your existing accounts more time to age between additions.

Although the age of your accounts is an important part of your credit scores, it's also important to remember that it's just one of many factors that contribute to your scores. Time will age up your credit history without much involvement from you, so focus on the parts of your score you can actively improve.

Pay your bills on time, keep your balances low, and space out your applications to keep your overall credit in great shape. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read The Ascent's full review for free and apply in just 2 minutes. Hard inquiries typically stay on your credit reports for two years. In general, you need to have at least one account open that has been reporting to the credit bureaus for six months to have enough information to generate a credit score.

You can continue to build your credit history by paying your bills on time and establishing a mix of credit accounts that includes installment loans like a student loan or mortgage and revolving lines of credit like a credit card or home equity lines of credit. You could also become an authorized user on an account where someone has a long-established credit history. Your payment history and the amount you owe to lenders account for more than half of your credit scores.

Continue to do that consistently through the years and eventually you will have built a strong credit history. A: It is important since it provides information to the lender about your financial stability. It reveals the level of risk they lenders will have to absorb when they deal with you.

Image: Young woman smiles as she checks her wristwatch in her home office, wondering how the age of her credit history impacts her credit scores,.