Length of Credit History 15% – Part 1
This is the middle-child section of your credit score. It got gypped by being given a similar name to its older and bigger brother Payment History. Apparently originators of mathematical equations quickly lose creatively just like astrophysicist when naming stars…”honey let’s space travel to X2V-L583 someday”. Payment History documents each time a payment (good or bad) is made on an account. Length of Credit History calculates how long ACTIVE accounts have been open, and roughly averages those accounts together. An example of this is if you take your 2 year old credit card, 4 year old auto loan and your 6 year old mortgage you end up having 4 years credited to your Length of Credit History ((2+4+6) divided by 3).
Obviously the name of the game in this section is to get as long of credit history as you can. Some points to consider here are as follows: Refinancing may be a good financial move but it will always hurt your score. Refinancing mortgage and auto loans will reset the open date and thus turn the historical clock back to zero, although most of the time the historical history sacrifice is well worth the financial gain. Revolving accounts give consumers the best opportunity to maximize length of credit history as their payment terms are open ended. Installment accounts by definition have not only a fixed payment amount but also a fixed period of time, thus the maximum length of credit history is defined when the account is opened. Store cards thrive in this section even though they may seem small and insignificant. Their credit history counts just as equally and all you have to do is keep them open and active. I’m not saying you have to buy your loved one some new diamonds on your Kay Jewelers account each month, but they may well have some chewing gum in the checkout isle.