The length of your Credit History, also known as your credit age or credit history length, is an important factor in calculating your credit score. It reflects how long you’ve had credit accounts and contributes to your overall creditworthiness. Here’s how your length of credit history is calculated:

Account Open Dates:

   – The credit bureaus track the opening and closing dates of your credit accounts. These accounts include credit cards, loans, mortgages, and other credit-related accounts.

Age of Each Account:

   – For each of your credit accounts, the age is calculated based on the time that has passed since the account was opened. The age of an account is measured in months and years.

Average Age of Accounts:

   – To calculate the length of your credit history, credit scoring models typically consider the average age of all your credit accounts. This is done by adding up the ages of all your accounts and dividing by the total number of accounts.

Oldest Account:

   – The credit scoring model also considers the age of your oldest credit account. This is often referred to as the “oldest trade line” or “oldest credit card.” The older this account, the more it positively impacts your credit score.

Newest Account:

   – The age of your newest credit account is another factor that can affect your credit score. A very recent credit account may have a smaller positive impact on your score compared to older accounts.

Closed Accounts:

   – Closed accounts may still be factored into your credit history length, depending on the credit scoring model being used. Generally, they continue to contribute to your credit history for a period after closure.

Inactive Accounts:

   – Inactive or dormant accounts that you no longer use may still be considered when calculating the average age of your accounts.

It’s important to note that the length of your credit history is not solely based on the age of your oldest account. The average age of all your credit accounts plays a significant role in determining this aspect of your credit profile. As a result, opening new credit accounts can affect your credit history length, as they will bring down the average age of your accounts, especially if they are relatively new.

How Much Time Is Considered Good Credit History?

A good credit history typically involves several years of responsible credit management. While there’s no fixed duration that universally defines a “good” credit history, having a credit history that spans at least several years is generally considered favorable.

Managing your credit responsibly, keeping older accounts open when possible, and avoiding frequent new credit applications can help you maintain a positive credit history length, which is beneficial for your credit score. Remember that credit history length is just one of several factors that influence your credit score, so maintaining a well-rounded credit profile is essential for a strong credit score.