Buzz
Your credit history is often one of the more puzzling elements of your credit score. Even if you maintain healthy credit habits, your age may seem to hinder you. But aside from simply waiting to gain more experience, is there anything you can do to improve your score?
The good news is that credit history only accounts for 15% of your overall score, so being younger or newer to credit won’t drastically hurt you. However, age alone isn’t the sole factor in this part of the equation. “It’s not just about how long you’ve had credit,” explained Matt Schulz, chief industry analyst at CompareCards. “There’s some complexity to it.”
FICO scores, for instance, evaluate three factors when determining this section of your credit score, as outlined by the MyFICO blog:
The duration for which your credit accounts have been open, including the age of your oldest account, the age of your newest account, and the average age of all your accounts.
The length of time specific credit accounts have been active.
The time since the account was last used.
Lenders not only want to know how long your accounts have been open—they also want to ensure that you're using each of them responsibly. “It’s really about providing lenders with more data points to aid their decision-making,” said Schulz.
Brent Weiss, CFP and cofounder of Facet Wealth, stated that when individuals avoid using credit due to fear of debt, they can fall behind in terms of scoring and credit history. He suggests obtaining a credit card with a low limit as soon as possible to begin building credit history, whether you're young or just new to using credit. “Consider it an empowering tool,” he said. “You need to start building that credit history and ensure you're making timely payments.”
Since the largest portion of your score is influenced by your timely payments and how much of your available credit you’re using, it makes more sense to focus on maintaining good habits in those areas rather than attempting to manipulate your history. “There aren’t any major shortcuts,” said Schulz. “It’s about doing the right thing consistently.”
Although being an authorized user on someone else's account can help boost your score, having accounts under your own name has a greater impact, according to Schulz.
If you close a credit account in your name that had a positive payment history, it will remain on your report for 10 years. However, if you are no longer an authorized user, that history disappears immediately. You may notice a slight drop in your score, but if you’ve been actively working on building your own solid credit, your score won’t experience a major decline without that authorized status.
