Average Age of Accounts

Full definition

Average age of accounts (sometimes called 'length of credit history') is a FICO score factor that evaluates how long you have been using credit. It accounts for approximately 15% of a FICO score and is calculated based on several sub-factors: the age of your oldest account, the age of your newest account, and the average age of all accounts. Why it matters: A longer credit history gives lenders more data to assess your repayment patterns. A borrower with a 10-year credit history during which they always paid on time is a demonstrably lower risk than a borrower with 6 months of history, even if both have the same payment pattern. How opening new accounts hurts account age: Every new account starts at age zero, which lowers the average age of all accounts. This is a key reason why opening new credit cards just for rewards, or opening a new loan you don't need, can temporarily damage your score even if you make all payments on time. The impact on personal loan applicants: Young borrowers (under 30) and recent immigrants often have thin files with a short average account age. This suppresses scores even with perfect payment history. Adding a credit-builder loan or becoming an authorized user on an older family member's credit card (which adds that account's age to your file) can help. Keeping old accounts open: Closing an old credit card (even one you don't use) reduces your oldest-account age and raises your average interest rate. Generally, keeping old accounts open with no balance or a small recurring charge is better for your score than closing them.

• Credit score
• FICO score
• Tradeline
• Credit Mix