What You Should Know About Credit History

One component of your credit score is your credit history. The longer history of consistently paying bills on time that you can show lenders, the better off you are. Let’s answer some questions you might have about credit history and how it impacts your credit score.

What Does Length of Credit History Mean?

Length of credit history refers to how long the accounts on your credit reports — from the credit bureaus Equifax, TransUnion, and Experian — have been open.

How is Credit History Calculated?
There are a few factors used to calculate your credit history:

• How long specific accounts have been open
• The average age of all of your accounts, how long your newest account has been open, and how long your oldest account has been open
• How long it has been since you used the open accounts on your report
• If you have late payment, which can stay on your credit report for up to seven years

How Does the Length of Credit History Impact My Credit Score?
The older your credit history, the better it is for your score. Length of credit history is worth 15 percent of a FICO Score and 20 percent of a VantageScore score.

Should I Leave Old Credit Cards Open or Close Them?
In general, it’s a good idea to leave credit cards open as long as possible. Yes, even the ones you don’t use. That’s because closing an account can lower your overall credit limit, which can hurt your score. If the card you no longer use has an annual fee, you might want to go ahead and cancel it. Your score will rebound rather quickly. Otherwise, keep your account open to boost your credit history.

How Often Should I Pull My Credit Report?
The Consumer Financial Protection Bureau (CFPB) suggests people pull a report at least every 12 months, to make sure there are no errors that could result in someone not getting the best terms on a loan, or worse, being rejected altogether.

Horizon offers customers a great tool to stay on top of your credit report called CreditAdvisor. All customers with Online Banking can enroll for free from the menu of your online account. Your credit score will automatically update every 7 days, or you can click ‘Refresh Score’ to update your report every 24-hours. Enroll for free today!

Written By Chris O'Shea

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