As you get older — and hopefully wiser — you’re supposed to become more responsible. You’ve likely stopped rotating spaghetti and ramen noodles as your only two “home-cooked” meals, probably traded out your clubbing heels for sensible walking flats, and maybe started getting annual checkups instead of ignoring your aches and pains.
The question is: Does the credit industry recognize this maturity and throw you a few extra credit score points as you age? No, but your age may indirectly affect your credit. Here’s what you need to know about the relationship between age and credit scores.
First things first: Is my age a factor in my credit score?
Your credit score is made up of five factors — payment history (35%), credit utilization (30%), length of credit history (15%), types of credit in use (10%) and new credit (10%). So age isn’t a direct factor. However, the third factor — length of credit history — may be heavily influenced by age. Let’s start with what “length of credit history” really means.
The length of credit history takes into account the ages of your newest and oldest accounts, as well as an average length of all of your credit accounts. The longer the average age of your credit accounts, the better. Which means as you get older, your credit score will likely go up, provided you’re practicing good credit habits.
How do I increase the average age of my credit accounts?
Patience is the name of the game when it comes to increasing the average age of your accounts. However, there are a few things you can do.
Don’t cancel credit accounts, especially your oldest accounts. Let’s say you have one credit card that’s seven years old and two that you applied for this year. If you cancel the oldest card, your score will likely drop quite a bit. Keep your oldest credit cards open. If you absolutely want to cancel a card or two, get rid of younger cards you don’t use much.
Don’t apply for too many new accounts. Each time you get approved for a new account, your length of credit history will go down. Really think about which credit cards you want and try to use your oldest cards occasionally.
Get added as an authorized user on an old card of a friend or relative. If someone wants to help you increase the average age of your accounts, you can ask him to add you as an authorized user on his oldest card. This only makes sense if this person has a pretty old credit account — meaning one or two years old is probably not sufficient. Also, make sure he verifies with his card issuer that authorized users are reported to the credit agencies.
Length of credit history is only part of the equation …
While it’s great to lengthen the average age of your credit accounts, this factor is only 15% of the credit score equation. In order to build an excellent credit score, you’ll need to practice good credit habits all around. Most importantly, you need to make all of your payments on time and keep your debt balance to credit limit ratio below 30%. Don’t rely on the aging process to fix your credit issues — no number of years passing will get you an excellent score if you’re constantly paying your bills late.
Bottom line: While age isn’t a direct factor in your credit score, length of credit accounts can be heavily influenced as the years go by. To increase the average age of your credit accounts, don’t cancel old cards, don’t apply for too many new cards, and/or ask a loved one to add you as an authorized user on his oldest credit account. Also, don’t ignore the other factors that make up your credit score.
Middle-aged couple having coffee image via Shutterstock