The importance of credit history length
Like fine wine, whiskey, and cheddar cheese, most credit histories only get better with age. Though length of credit history only accounts for 15% of your credit score, it's still an important influence on lenders, and can definitely impact the chances of whether or not you get a loan.
Though some people who haven't had credit for a considerable length of time can still have a high FICO® Score if the rest of their credit report looks good, a longer credit history will always have a positive effect on FICO® Scores.
When it comes to length of history, your FICO® Scores take three things into account:
How long your credit accounts have been open, including the age of your oldest account, the age of your newest account, and an average age of all your accounts.
How long specific credit accounts have been open.
How long it has been since the account has been used.
No credit history, no FICO® Scores, no problem
The big catch-22 of growing your FICO® score it that you need credit to get credit, and it's difficult to open lines of credit to build your FICO® Score if you don't have a good FICO® Score. Fear not. You can absolutely do constructive things to help grow the length of your credit history. Here are a few to get you started.
First, apply for a secured credit card. A secured card is a card where you provide cash collateral for the line of credit. FICO® Scores look at secured cards the same as any credit card. Most banks and lending institutions not only offer secured cards, but most also report secured card activity to the credit bureaus.
Second, see if you can get a friend or family member with good credit to be a co-applicant with you - this will help you establish your credit history. Or, see if they are willing to authorize you on their card. It's a lot to ask, but if they're willing, it's a good way to start growing your credit history.
Finally, adopt a mindset where you see the length of your credit history as part of your greater long-term credit strategy. Use your card, but keep the balances low and pay on time. If you do, you'll find yourself well on the road to building a strong credit history that you can put to work for you.
Consider whether or not to keep credit accounts open
You may be tempted to shut down that credit card that you just paid off after years of making payments. Before you do, take a moment to consider what impact closing that account may have on your length of credit history.
If it is one of your older accounts, it may be worthwhile to keep it open to maintain the average length of your history.