What Is a Good Length of Credit History?

When you hear the term "credit," the first thing that likely comes to mind is your credit score- a numeric representation of your financial health. While your credit score is an important metric, it’s more than just a number. It is influenced by a variety of factors, one of them being your credit history.

Credit history refers to the record of all your borrowing activities, including loans, credit cards, and repayment behavior. So, what is a good length of credit history? Generally, a credit history of 7 years or more is considered good. This period provides enough time to demonstrate responsible credit management, which can help boost your creditworthiness.

In this blog, we’ll explore the importance of credit history and why a good length of credit history matters.

What Is Credit History?

In simple terms, credit history is a record of all your borrowing and repayment activities. It tracks information about your credit accounts, loans, payment habits, and the length of time you've held these accounts. This data forms a key part of your credit report, which lenders use to evaluate your creditworthiness—basically, your reliability in repaying borrowed money.

Lenders may consider several key questions when reviewing your credit history:

• Does this person demonstrate responsible repayment habits?

• How many types of credit accounts are there? (e.g., credit cards, mortgages, auto loans)

• What is the total amount owed, and how much of the available credit is being used? (Credit utilization ratio)

• Have there been any recent credit inquiries? (Too many credit applications can raise concerns)

• Are there any signs of bankruptcy or significant financial distress in the person's history?

• How stable is their credit behavior over time? (Consistency in making payments and maintaining low debt)

• Have there been any recent changes in credit patterns? (For example, a sudden increase in credit utilization or applying for multiple lines of credit in a short period)
   

And most importantly,

How long has the person been using credit? (The length of credit history, including the oldest account)

That brings us to the question,

What Is the Length of Credit History?

The length of credit history refers to how long you've had your credit accounts open. It indicates the duration over which you’ve been managing credit, providing lenders with an idea of your experience and consistency in handling debt. Having credit accounts open means that you have active accounts through which you can borrow money or access credit. These accounts can include:

• Credit Cards (Revolving Credit)
• Loans (such as auto loans, mortgages, or personal loans)
• Lines of Credit

The length of your credit history also considers how frequently you use your open accounts and how reliably you repay any debt. Credit bureaus like Equifax, Experian, and TransUnion maintain this information in your credit report.

How Is the Length of Credit History Calculated?

The length of credit history is calculated by considering two main factors:

• Age of Your Oldest Account

This is the number of years since your oldest credit account was opened. It provides a reference point for the start of your credit history.

• Average Age of All Accounts

This is the average length of all your credit accounts combined. It’s calculated by adding the ages of all your credit accounts and dividing by the total number of accounts.

To understand it simply, let’s say you have three credit accounts: a credit card opened 10 years ago, an auto loan opened 5 years ago, and another credit card opened 2 years ago. Then, the age of your oldest account will be 10 years, and the average age of all your accounts will come out to be 5.67 years. A longer credit history, reflected by these two factors, demonstrates responsible credit management and can positively influence your credit score.

What Is a Good Length of Credit History?

A good length of credit history is typically around 7 years or more. This duration is generally considered sufficient to showcase responsible credit behavior and effective management of different credit accounts over time. The age of your oldest account and the average age of all your accounts both play a role. 

While having a credit history of at least 7 years is ideal, longer is always better, as it indicates a good experience with credit. 

Borrowers with longer credit histories are often viewed more favorably because they have had ample time to demonstrate consistent and reliable credit usage. Additionally, it’s worth noting that most derogatory marks (like late payments or bankruptcies) may remain on a credit report for 7 years. This doesn't mean you need exactly 7 years of positive history for a strong credit score—it just means that negative marks will fall off by that time, making your positive history stand out more.

In essence, the longer your credit history, the stronger your profile. However, maintaining accounts in good standing over several years is what truly defines a solid credit history.

Points to Ponder: Building Your Credit History from Scratch If you're just starting to build your credit history, don't be discouraged by the idea that you need a minimum of 7 years to enjoy a good credit score. Many people can achieve solid credit scores even with a shorter credit history. How? By focusing on other critical factors like maintaining low credit utilization, making timely payments, and avoiding new debt inquiries. While time is one part of the equation, how you manage your credit within that time is just as important.

What Role Does Credit History Play in the Credit Score?

Credit history contributes around 15% to your overall FICO credit score. While this may seem like a small portion, it’s essential because it reflects how long you've been managing credit over the years. 

However, it's important to understand that credit history is just one piece of the puzzle. Credit scoring models like FICO also consider the following:

Having a longer credit history demonstrates stability, but having a mix of credit types and managing them well is also crucial for a strong credit score. A balanced approach that combines responsible use of various credit types with a long credit history creates a positive credit profile for lenders.

An Interesting Titbit A TransUnion study reveals that over 45 million Americans are either credit unserved—lacking access to traditional credit products—or underserved, meaning they have limited or insufficient credit histories. Approximately 20% of these individuals transition to being credit active every two years, gaining better access to credit opportunities.

How To Improve Your Credit History?

Slow & Steady Is the Key!

Improving the length of credit history takes time and consistent effort. Here are some effective strategies to consider to boost and maintain a strong credit history:

▪ Keep Old Accounts Active as They Age

The longer your accounts remain open, the more positively they impact your credit report. Lenders like to see that you’ve maintained credit for an extended period and managed it responsibly. Even if you no longer actively use an old credit card, keeping it open helps boost the average age of your credit accounts, a factor that enhances your credit score. 

For instance, consider using older credit cards for recurring monthly bills like utilities, ensuring the account stays active without accumulating unnecessary debt.

▪ Avoid Closing Your Credit Cards

Closing credit cards can negatively affect the average length of your credit history and increase your credit utilization ratio (the amount of available credit you’re using). It’s often better to keep credit cards open, especially those without annual fees, to maintain your credit history length and available credit. 

However, assess your personal situation. For example, if you tend to max out your credit limit, closing the card may protect you from financial strain.

▪ The Sooner You Start, the Better

Starting early gives you a head start in building your credit history. Even if you don’t need credit right away, opening a small line of credit and managing it well over the years can benefit you when you apply for larger loans, such as mortgages or auto loans, in the future.

▪ Use Your Credit Accounts Regularly

Keeping accounts open isn’t enough—you need to use them periodically to show active and responsible credit usage. Small, regular purchases that you repay in full can help keep the account active and demonstrate positive credit behavior.

▪ Make On-Time Payments

Always pay your bills on time. Consistent, timely payments on all your credit accounts—credit cards, loans, and even utilities—will strengthen your credit history and show lenders you’re a responsible borrower.

▪ Diversify Your Credit Types

A mix of credit accounts, such as revolving credit (credit cards) and installment loans (auto loans or mortgages), shows that you can manage different types of debt. Lenders like to see this variety in your credit profile.

▪ Avoid Applying for Too Much Credit at Once

While having a mix of credit accounts (e.g., credit cards and installment loans) can boost your score, applying for multiple new accounts within a short time frame can hurt your credit. Too many inquiries signal to lenders that you may be desperate for funds, which can be seen as risky. Space out applications and limit credit inquiries to avoid lowering your credit score unnecessarily. 

For example, if you're planning to buy a car or home, avoid opening new credit card accounts around the same time to minimize negative effects on your credit score.

How to Maintain Your Credit History

Stay Vigilant With Regular Monitoring!

As stated above, building a solid credit history takes time and effort, but maintaining it requires ongoing attention as well. Keeping an eye on your credit report helps you spot any issues that could negatively affect your credit score. For example, are there any errors or negative items on your report that need to be addressed? Monitoring your credit regularly ensures that any inaccuracies or potential red flags are identified and resolved quickly.

Take Control in Your Own Hands Try CoolCredit! You can use apps like CoolCredit to stay on top of your credit history. With CoolCredit, you can access your free credit reports from all three major bureaus (Equifax, Experian, and TransUnion). CoolCredit’s AI credit repair system scans your reports to flag any negative items and helps you challenge errors, ensuring your credit report stays accurate and clean.

Conclusion

A good length of credit history is a key component of your credit score and overall financial health. Building and maintaining a long, positive credit history takes time, but the benefits are substantial. If you're just starting out or need to improve your credit history, there are clear steps you can take, from using credit responsibly to diversifying your accounts. 

Start today, so your future self will thank you for the effort!

FAQs

Q: How Long Is a Good Credit History?

A: A credit history of 7 years or more is generally considered good, as it shows a strong track record of responsible credit management.

Q: What Is the Length of Credit History?

A: The length of credit history refers to how long your credit accounts have been open and active, with an emphasis on the age of your oldest account.

Q: Does a Longer Credit History Improve My Credit Score?

A: Yes, a longer credit history typically improves your credit score, as it demonstrates consistent and responsible credit usage over time.

Q: Can I Have a Good Credit Score With a Short Credit History?

A: Yes, even with a shorter credit history, you can have a good credit score if you maintain low credit utilization and make all payments on time.

Q: What Factors Affect the Length of Credit History?

A: The length of credit history is affected by the age of your oldest account, the average age of all your accounts, and how long each account has been open.

Q: Does Closing a Credit Card Hurt My Credit History?

A: Yes, closing a credit card can shorten the length of your credit history and increase your credit utilization ratio, potentially lowering your credit score.