Length of Credit History: How Does It Impact Your Credit Score?

credit history length

Are you looking for ways to build your credit score? Americans have an average credit score of 703! A credit score around 700 is a good one, but with the highest rating of 850, there is still a lot of room for growth.

There are many different factors that go into determining your credit score, including the creditor, the amount of credit, your payment history, and the length of time you’ve had this account. Read on to learn about how the length of credit history impacts your score!

Showing Creditors Your Track Record

Think of your credit report as the resume you present to a potential creditor on your behalf. Typically when you apply for a new credit line, you’ll need to fill out an application. A creditor will perform a credit inquiry to see how you’ve behaved in the past.

What is credit history? Simply put, it’s the roadmap for credit lines you’ve had before you apply for a new loan or line of credit. Your credit history will show a creditor what you’ve done with what you’ve been given.

For example, if you’ve received a $10,000 credit line and used it responsibly for one year, this is much less impressive than if you did it for five or ten years. In short, the longer your credit history, the better!

Increase Your Credit Line Responsibly

The length of your credit history should also show a potential creditor that you’ve had increased credit lines but have not been irresponsible with your privilege.

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For example, let’s compare a credit history with American Express over one year versus five years. When you first establish a line of credit, you may be given a starting line of $5,000. As you use the credit and pay off your balance, you can request an increase in your credit line. By year five, you may have doubled your line of credit to $10,000.

The combination of a long history with an increased line of credit can help you show your creditworthiness in your loan application. Try requesting a credit line increase with your credit card company today to see how it works for you!

Cut Risk to Your Benefit

One of the most important measures of your creditworthiness is your credit utilization ratio. This ratio is the measure of the total amount of credit you use divided by your total credit line across all creditors.

By showing a credit card company or other creditors that you have a lot of available credit with responsible use over time, this demonstrates that you are a smaller risk to them than other applicants.

This gives you a better chance to receive approval on your credit application!

Wrapping Up: The Length of Credit History Counts

The length of credit history is meaningful to prospective creditors. That’s because it shows a creditor that you’ve been responsible for using loans and other credit lines for an extended period of time.

This responsible behavior gives a creditor peace of mind that you are less of a risk than someone without that kind of track record. Are you interested in learning about other helpful personal finance tips and tricks?

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