First off, what is credit age?

Otherwise known as length of credit history, it’s how long you’ve had credit (loans, credit cards, etc.) and a record of how well you’ve managed that credit.

Why is credit age important?

In order for credit card companies, mortgage lenders, and other potential debtors to decide whether or not to give you a credit card, loan, or other type of credit, they need to see how you’ve managed your debts, bills, and other credit items in the past. If the age of your credit is zero years, they have nothing to go on. So to get approved for that car loan, you need credit history.

What is sufficient credit history?

It takes six months of credit to get a FICO score. That’s probably the most important. In reality, the answer depends on what you’re trying to do. A mortgage lender is going to want a lot more history than a company that offers credit cards for bad credit. The credit age you need depends on your existing history and what you’re trying to do with credit. Click below to get in touch with us for a free consultation where we’ll dive into your individual situation.

There are two parts to calculating the age of your credit, and it’s important to understand them.

The first one is simple: the age of your oldest credit item (credit card, loan, whatever) is part one of your credit age. This is why it can be really important to NOT close that old credit card. If you’ve had a credit card for 8 years and a car loan for one year, your credit age is 8 years. If you close that credit card, you just reduced your credit age to 1 year. Not great.

The second part of credit age is calculated by averaging the age of all your credit items. This is why it’s important to not open too many new accounts. If you’ve had an auto loan for 2 years and a credit card for 4 years, your credit age is 3 years. If you get a new credit card with 0 years of history, that brings your average down to 2 years. That could make a difference in your ability to, for example, get a home mortgage.

Alright so how do I improve my credit history?

Perhaps the most important concept to learn is that just because a credit item has a bad history, doesn’t mean you want to get rid of it. If a collections agency puts something incorrect on your report, then yes – get it off regardless of age because the negative item hurts your score more than shorter credit history. But if you paid your credit card bill late for a few months back in the day, there’s nothing you can do to change that, and closing that account is only going to hurt your credit age.

The second strategy for improving your credit history is to just be smart about which accounts you keep, which you get rid of, and whether you get new accounts. An example: if you know you’re going to apply for a home mortgage, don’t go out and get a new credit card until you’ve applied. Wait until after, because that new credit card account is going to shorten your credit history.

Then there’s the concrete stuff. Credit cards are one of the best ways to build credit history. They’re easy to get (yes, even if you have bad or even zero credit) so you can start building history immediately. Read more about the importance of credit cards to credit repair here.

Do I want a short history of good credit, or a longer history of bad credit?

That gets complicated, and depends on your situation. It’s the exact sort of thing Swell can help you with, so click above to get in touch.