January 25, 2009

In calculating your credit score, the length of your credit history makes up 15%.  The importance of credit history, is a short history is less reliable.  A nice long history paints a larger picture of you to lenders.  The longer the better.

Here are the stats from MyFICO

The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time. In fact, we found that 1 out of 4 consumers had credit histories of 20 years or longer. Only 1 in 20 consumers had credit histories shorter than 2 years.

Two factors are considered when judging your credit history.

• What is the age of your oldest account
• What is the average age of your accounts

Here are some ideas to keep in mind when managing your credit history:

• What is the effect of closing an account?
• what is my oldest account?
• What will happen when add a new account?

Considering these factors could help you decide what is the right action when pertaining to your credit history.  You obviously want to stay away from closing your oldest account.  You need to protect this account because a closing of this account will effect both factors (oldest account and average age).