Average Age of Credit History -True or False

gravatar- Oct 21, 2020credit1 comment

If you ever reviewed your credit report using Credit Karma, Wallet Hub, Nerd Wallet, etc., you may have noticed that they all break down your credit history based on the average age of credit history taken from all your trade lines combined. For example, if you have a credit card that is 10 years old, another credit card which is 3 years old, and a mortgage that is 4 years old, then Credit Karma will have your age of history at 5 years and 6 months.

What Is Credit History?

Credit history accounts for 15% of the FICO scoring model. Credit history factors in three parts (see this FICO doc).

1. How old your oldest account is,

2. How many new accounts you have (accounts less than six months old),

3. Your average age of credit history.

Average Age Of Credit History - True or False?

The “average age of credit history” is just one of three factors Fico uses to calculate your actual credit history.

In my experience, what matters most for credit history, is not having too many accounts that are less than 6 months, plus making sure your oldest account (or better, your three oldest accounts) stay open and active forever.

If you can check off those facts then you do not need to sweat about your “average age of credit history”. And more than that, in my experience, FICO usually does not look much at the “average age of credit history”.

I am not saying that opening a new credit card does not affect your credit at all. Yes, I do agree that opening a new tradeline will have an effect on your credit score, but the effect will only last for as long as the account is considered new (which is six months). After that your score will only go up, and probably even higher then what it was before!

Will Applying For A New Credit Card Affect Your Credit Score?

Every time you apply for a credit card, the bank will want to pull your credit report to see your credit history, credit score, etc. This is called a credit inquiry. A credit inquiry will show up on your report for the next two years. It makes no difference if you got approved for the credit card or not, as long as you applied for the card the inquiry will show up. Before lenders approve you for credit, they will look through your inquiries to see how many times you’ve already tried to apply for credit in the past. No one likes to lend money to someone who is running around town and asking every bank for a loan.

FICO and Vantage Score will slightly lower your credit score after you make a credit inquiry. It will go back up after about one to two months, but if you have too many credit inquiries, it may affect your score more than that. It is not recommended to have more than 5 credit inquiries in a 6 month period.

Please note that most banks will only pull one of the three credit bureaus, so if you apply for a Chase credit card, Chase pulls your Experian credit report. If you then apply for a Barclay card, Barclay will pull your Transunion report. So turns out, even though you applied for two credit cards, you still only have one credit pull on each of your credit reports (Capital One is the only large issuer that does pull all three credit bureaus.)

You can research which credit bureau each bank or credit card issuer pulls in our credit card database.

Once you get approved for the credit card, the new account will eventually get reported to the credit bureaus (depending on the bank, it can sometimes take about 30 days). Once your new account gets reported, your credit will get another blow because now you have opened a new account. Credit models will lower your score until they see that you prove yourself capable of handling the new credit account you opened.

New credit does not affect everyone equally. Someone who has less open accounts or a lot of new accounts will get more affected by a new credit card than someone who has a lot of good standing and old accounts.

Conclusion

I personally have never found the factor of average age of credit history to be true. But, I do agree that as long as the new account is new (less than 6 months) your score will be affected by the new account. But, once the six months go by, your score will be back to the same or even higher then it was before, regardless of what your average age of credit is now.

Was this article helpful?

gravatar
Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

Leave A Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.

1 Comment

  1. hahaha! u made me laugh with that last one!

    Reply

Trackbacks/Pingbacks

  1. How Much Will Opening a New Credit Card Affect My Credit Score? - Help Me Build Credit - […] years which may result in a lower credit score. I personally never found this to be true (read more…

Recent Posts

Follow us

image

Click here to subscribe to
our WhatsApp channel

Todays
best offers

image

Chase Ink Business Preferred

Earn 100,000 points after $15,000 spent within the first 3 months.

more info
image

Chase Ink Business Unlimited

Earn $750 (75,000 points) after $7,500 spent within the first 3 months. Intro 0% APR for 12 months on purchases.

more info
image

United Explorer

Earn a total of 70,000 points after a total of $6,000 spent within the first 6 months.

more info
image

JetBlue Card

Earn a total of 100,000 points after a total of $6,000 spent within the first 12 months. See offer details for full offer. Intro 0% APR for 12 months on balance transfers.

more info

You May Also Like

Where Can I Find The Most Accurate Credit Scores?

Where Can I Find The Most Accurate Credit Scores?

What’s sweat-inducing, hair-raising and spine-chilling for men and women alike? Credit scores. Yep, those intangible & non-physical numbers that determine our lending options, insurance quotes, job opportunities and even the fact of having a roof over our head....

read more
The 5 Most Important Factors In A FICO Score

The 5 Most Important Factors In A FICO Score

The FICO score model is the mostly widely used scoring model. As per Fico, as much as 90% of lending decisions that are done using a scoring model, use the Fico scoring model. In this post we will discuss the 5 most important factors that Fico would look at in order...

read more
Why Are My Credit Scores Different?

Why Are My Credit Scores Different?

When people check their credit score, should it be by Credit Karma or on their Discover statement, etc., they look at the three-digit number. They take it as a fact that this is their credit score. Period. The same way they know their age and weight, they feel that...

read more
Credit Scores And Mortgages: Here Is What You Need To Know

Credit Scores And Mortgages: Here Is What You Need To Know

Shopping for a mortgage but got bad credit? You are not alone! I invited a great mortgage expert Chaim Tarkieltaub from Mint Capital to explain the differences between the different mortgage products available for consumers at all stages of credit. Let’s explore the...

read more
Intoducing FICO® Resilience Index

Intoducing FICO® Resilience Index

Fico now has another tool to calculate how consumers use credit. The FICO® Resilience Index was created specifically for difficult financial times. Lenders will be able to decide if a consumer can handle his finances during difficult times. They are referring to that...

read more
Credit Utilization

Credit Utilization

One of the biggest factors that credit models look at when calculating a credit score is credit utilization. Credit utilization means how much of your credit line you utilize. The less money you spend on your credit cards, the less money you have in debt, compared to...

read more
Piggybacking Credit- Everything You Need to Know

Piggybacking Credit- Everything You Need to Know

What Is Piggybacking Credit? Piggybacking credit is having a third party, a creditworthy individual, add you to their credit card as an authorized user. This will allow you to receive the credit benefits from that account, helping you improve your own credit score...

read more
image

Download link sent
succesfully

Got it*please check your promotional inbox
image

Error sending download link

Try Again