Does credit scoring favor older, more mature people?
Credit scores do not consider a consumer’s age. Instead, it’s the age of your credit file, not your age as a person, that directly impacts your credit score. The length of your credit history accounts for about 15% of your credit score.
When calculating your scores, credit-scoring models typically consider the age of your oldest account, the age of your newest account, as well as the average age of all your credit accounts.
They also look at how long specific credit accounts have been established and how long it’s been since you’ve used certain credit accounts.
What Influences Your Credit Score the Most
While it’s great to have a nice, long credit history, the age of your credit is not the biggest influence on your credit score. What does? Your payment history. That accounts for about 35% of your credit score. In other words, it’s how you manage the credit that you do have that affects your score the most.
Making on-time payments on a credit card account, a retail account, an installment loan, a finance company account, or a mortgage loan will all lift your credit score. So whatever your age, you can give your credit score a boost by making on-time payments each and every month.
Paying down debt will help your credit score as well, since the second-most important factor influencing your credit score is the amount of your debt. That makes up about 30% of your credit score. A credit score scrutinizes how much you owe on credit accounts in a number of ways.
Most scoring models typically consider the amount owed on all your credit accounts, amount owed on different types of credit accounts, how many accounts have balances and how much of an account’s total credit line is being used, and the amount of an installment loan and how much is still owed.
Checking Your Credit
Wondering if your credit is in decent shape? It’s a good idea to get in the regular habit of reviewing your credit reports and credit scores. You can get your credit reports for free once a year through AnnualCreditReport.com. And you can get two free credit scores each month plus tips and expert advice on improving your credit from Credit.com. If you see a large, unexpected drop in your credit scores, that’s a good time to check your credit reports for any problems, inaccuracies or signs of fraud.
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Image: Alberto Bogo