Attention to all those chasing that 850 FICO score... Length of Credit History is 15% of your score. If you are trying to build your credit score...
HOLD ON TO THOSE OLD ACCOUNTS! Pay them down (1/3 of the credit limit) but don’t close them. Closing old credit accounts means that those accounts will no longer be included in your score.
It kills me when I’m facilitating a workshop and a 21-year old adult claims they have an 850 FICO score. I’m always embarrassed when I get to the part of the workshop when I say “In order to reach a 850 credit score you need to be in the credit system for at least 20 years (managing some type of credit)."
In regards to your score, the Length of Credit History factor focuses on everything from your oldest account to your newest. They also focus on your average age of your credit and how long it's been since you used your accounts. They like to see long consistant payment histories: Having a long and well established credit history will help your credit score grow!
Bootcamp Challenge: Keep your paid-off credit cards open, and use them responsibly (especially those you have had for awhile). Responsibly means know what you spend on them and either pay the balance in full each month or keep the balance as low as you can to avoid high interest and an out-of-control balance.
Try not to stress out by focusing on your score all the time, keep your eye on the 5 factors (payment history, amounts owed, length of history, new credit, and types of credit you use) for protecting your score and your perfect score will come. It's not always the score that is important, it's your habits...with the right habits, your score will follow.
If you'd like to learn more about Guest Author and Expert Coretta Herring, visit Pathways to Financial Empowerment for other great credit and financial empowerment advice.
Want to read more from the Boot Camp series? Check out:
- Part One: Overcoming Credit Obstacles to get a Mortgage
- Part Two: What to do to Fix your Credit Score
- Part Three: Fix your score by mastering your payment history
- Part Four: How Credit Card Debt Affects Your Score
Struggling with your credit, but want to own a home? Rent to own may be a great option for you, check out Strong Blocks by clicking the button below.
Coretta Herring is Financial Coach for Pathways to Financial Empowerment and Real Estate Agent for Any House Realty. Prior to that she worked for Keller Williams and ACTS Housing serving as a counselor helping individuals renting properties owned by the City of Milwaukee transition into homeowners. Coretta has more than 13 years of credit counseling experience, serving, most recently, as the Financial Opportunity Center Program Manager for Riverworks Development Corporation. Corretta previously worked for the City of Milwaukee Neighborhood Improvement Development Corporation as a Community Outreach Liaison and, for a decade, at the Boys & Girls Clubs of Greater Milwaukee, most recently as the Family Service Director. She has a Bachelor of Arts degree from Upper Iowa University. Many years prior to joining ACTS, Coretta purchased a home through ACTS in the ACTS North neighborhood, where she currently resides. You can email her at firstname.lastname@example.org