Longer Credit History Length is better than Shorter Credit History Length for your credit score

Part 22: As part of series of articles (blogs) regarding Credit and Credit Score, here we go:

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Every effort has been made to make these articles as complete and as accurate as possible, but no warranty or fitness is implied.
The information provided is on an “as is” basis. The author shall have neither liability nor responsibility to any person or entity with respect to any loss or damages arising from the information contained in this book.

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Credit History Length: Accounts for 15% of your credit score

Like in statistics, test results with larger samples are more reliable than the test results with smaller samples. A person with 20 years of credit history gets a much higher score than a person with 6 months of credit history. Average Credit history length will be calculated considering all loans. For example, if you have three credit cards; Visa (20 years), MasterCard (12 years) and American Express (1 Year), then your average credit history would be (20+12+1)/3 = 11 Years.

TIPS:

As you can see in above example and from previous examples, don’t close your “OLD” credit cards, especially if they are no-fee credit cards.
 

Use your cards from time-to-time and pay your balances in full. This builds credit and credit history length. Some creditors will close your account if you don’t use them for a while. Don’t let this happen to you. Don’t close a card with a substantial length of credit history.

 Again, if you are buying a home sometime soon, don’t be tempted to open a store charge card to receive discounts. Though, these discounts can be huge, sometimes up to 25% of your purchase’s on the first day, this would be a new card that causes your average history length to go down. For example, if you already have two credit cards; Visa (20 years), MasterCard (12 years) and you apply for a new store charge card (0 years), your credit history length drops from 16 years to 9.9 years. This has a negative impact to your credit score.

TIP:
A long-length credit history, even with some negative information, could  receive higher score than a short-length credit history with no negative information.

                                          

 

HOW to overcome the problems with your credit history and credit score?
Knowledge, education, awareness, practice and discipline are the essential keys to being successful on any subject. The book, "Credit Score Tips and Tricks", provides you information, tools, techniques to educate yourself and manage your credit report & credit score, and therefore manage your finances effectively at no additional cost.

I have decided to bring and share with you, chapters or sections of my book, Credit Score Tips and Tricks, as series of articles here. This is the number 22 of such a series.

I also created and manage a GROUP in ActiveRain, Credit Reports and Credit Scores, Please feel free to join and share your thoughts and experiences.

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