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:
Disclaimer:
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.
The author is not engaged in professional
services. If professional advice or other expert
assistance is required, the services of a
competent professional person should be sought.
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.
