Improving the Length of Your Credit History

Quick answer

• Open a new, low-fee credit card and use it for small, recurring bills you can pay off immediately.
• Become an authorized user on a trusted person’s well-managed credit card account.
• Avoid closing old, unused credit accounts, especially if they have a good payment history.
• Use credit responsibly by making on-time payments and keeping balances low.
• Consider a credit-builder loan or secured credit card if you have limited credit history.
• Regularly check your credit reports for errors and dispute any inaccuracies.

Who this is for

• Individuals who are new to credit and want to build a strong credit profile.
• People looking to improve their credit score for major financial goals like buying a home or car.
• Those who have had limited credit activity and need to increase the average age of their accounts.

What to check first (before you act)

Goal and timeline

What are you trying to achieve with an improved credit history? Are you planning to apply for a mortgage in six months, or are you building credit for the long term? Your goal and timeline will influence the urgency and type of actions you take. For instance, a short timeline might necessitate more aggressive, but still responsible, strategies.

Current cash flow

Understand your monthly income and expenses. Knowing how much disposable income you have is crucial before taking on new credit or committing to regular payments. This ensures you can comfortably manage any new credit obligations without falling behind.

Emergency fund or safety buffer

Do you have at least 3-6 months of living expenses saved? A robust emergency fund is essential. It prevents you from relying on credit cards for unexpected costs, which can lead to high-interest debt and negatively impact your credit utilization ratio.

Debt and interest rates

List all outstanding debts, including credit cards, loans, and mortgages. Note the interest rate for each. High-interest debt can be a significant drain on your finances and can indirectly affect your creditworthiness if it leads to missed payments. Prioritizing high-interest debt repayment is often a wise financial move.

Credit impact

Understand how different actions affect your credit score. Opening new accounts can temporarily lower your score, but responsible management over time will improve it. Closing old accounts can reduce your average account age and increase your credit utilization, both of which can negatively impact your score.

Step-by-step (simple workflow)

1. Assess your current credit reports: Obtain your free credit reports from AnnualCreditReport.com. Review them for accuracy.

• What “good” looks like: Reports are accurate, up-to-date, and reflect your actual credit activity.
• Common mistake: Not checking reports regularly. This can lead to missed errors that harm your score.
• How to avoid: Make it a habit to check your reports at least annually, or more often if you’ve recently applied for credit.

2. Identify old, unused accounts: Look for credit cards or other accounts that have been open for a long time but are not actively used.

• What “good” looks like: You have accounts that have been open for several years.
• Common mistake: Closing old accounts prematurely, thinking it “cleans up” your report.
• How to avoid: Understand that closing old accounts shortens your credit history length and can increase credit utilization.

3. Strategically keep old accounts open: Resist the urge to close older credit accounts, even if you don’t use them often.

• What “good” looks like: You have a mix of old and new accounts, with the oldest ones remaining open.
• Common mistake: Closing an account that has a long history and a good payment record.
• How to avoid: Consider keeping them open with minimal use, or ask the issuer if they can be converted to a no-annual-fee card.

4. Use old accounts sparingly: If you keep an old card open, use it for a small, recurring purchase (like a streaming service) every few months.

• What “good” looks like: The account remains active with occasional, small transactions.
• Common mistake: Not using the card at all, which might lead the issuer to close it due to inactivity.
• How to avoid: Set a reminder to use it for a small purchase at least once every 6-12 months.

5. Pay all bills on time, every time: Make sure all your credit accounts are paid by their due dates.

• What “good” looks like: A consistent record of on-time payments across all credit lines.
• Common mistake: Missing payment due dates, even by a few days.
• How to avoid: Set up automatic payments for at least the minimum amount due, and then manually pay the rest before the due date.

6. Consider becoming an authorized user: Ask a trusted family member or friend with excellent credit to add you as an authorized user on their oldest, well-managed credit card.

• What “good” looks like: The primary cardholder has a long history of on-time payments and low credit utilization.
• Common mistake: Becoming an authorized user on an account with a poor payment history or high balances.
• How to avoid: Only do this with someone you trust implicitly, and ensure their credit management is impeccable.

7. Open a new credit account responsibly (if needed): If you have very limited credit history, consider a secured credit card or a credit-builder loan.

• What “good” looks like: You can manage the new account responsibly, making small purchases and paying them off in full.
• Common mistake: Opening too many new accounts at once, which can negatively impact your score.
• How to avoid: Open only one new account at a time and focus on using it wisely.

8. Keep credit utilization low: Aim to use no more than 30% of your available credit on any card, and ideally less than 10%.

• What “good” looks like: Your balances are consistently low compared to your credit limits.
• Common mistake: Maxing out credit cards.
• How to avoid: Pay down balances before the statement closing date, or make multiple payments throughout the month.

9. Monitor your credit reports regularly: After taking action, continue to check your credit reports for updates and to ensure accuracy.

• What “good” looks like: Your credit reports reflect the positive changes you’ve made.
• Common mistake: Forgetting to monitor after initial actions are taken.
• How to avoid: Schedule quarterly credit report checks.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Closing old credit accounts	Reduces the average age of your credit history, potentially lowering your score. Also increases your credit utilization ratio if you carry balances on other cards.	Keep old, unused accounts open if they have no annual fee and a good history. Use them occasionally for small purchases and pay them off immediately.
Missing credit card payments	Results in late fees, penalty interest rates, and a significant drop in your credit score. Can remain on your report for up to seven years.	Set up automatic minimum payments and reminders to pay the full balance before the due date.
Opening too many new accounts at once	Can lead to multiple hard inquiries on your credit report, temporarily lowering your score. It can also signal to lenders that you might be a higher risk.	Open new accounts strategically, one at a time, and only when necessary. Focus on responsible use of existing accounts first.
Maxing out credit cards	Significantly increases your credit utilization ratio, which is a major factor in credit scoring. This can make lenders see you as a higher risk.	Pay down balances regularly, ideally before the statement closing date. Aim to keep utilization below 30%, and ideally below 10%.
Not checking credit reports	Allows errors or fraudulent activity to go unnoticed, which can negatively impact your credit score and financial well-being without your knowledge.	Obtain your free credit reports annually from AnnualCreditReport.com and review them for accuracy. Dispute any discrepancies immediately.
Relying solely on new credit	While new credit is part of the picture, ignoring the length of your existing credit history means you miss out on a significant scoring factor.	Focus on managing all your credit accounts, both old and new, responsibly. The combination of good history and responsible use is key.
Not understanding authorized user impact	If the primary cardholder mismanages the account, it can negatively affect your credit, even if you don’t use the card yourself.	Only become an authorized user on an account held by someone with an excellent credit history and responsible financial habits.
Ignoring inactivity closures	If an issuer closes an account due to inactivity, it can reduce your overall available credit and shorten your average credit history length, potentially lowering your score.	Use older, no-annual-fee cards for small, recurring expenses every few months to keep them active.
Not disputing errors promptly	Uncorrected errors can lead to a lower credit score, making it harder to qualify for loans or get favorable interest rates.	Review your credit reports carefully and immediately dispute any inaccuracies with the credit bureaus and the relevant creditor.

Decision rules (simple if/then)

• If your oldest credit account is less than 5 years old, then consider keeping it open and using it sparingly because older accounts contribute positively to your credit history length.
• If you have a credit card with an annual fee that you rarely use, then consider calling the issuer to see if you can switch to a no-annual-fee card because this preserves the account’s age without ongoing cost.
• If you are considering closing a credit card account, then check your credit utilization ratio first because closing an account can increase your utilization and potentially lower your score.
• If you need to add positive credit history quickly, then becoming an authorized user on a responsible person’s long-standing account can be beneficial because it adds their positive history to your report.
• If you have significant high-interest debt, then prioritize paying that down before opening new credit lines because managing existing debt is crucial for overall financial health and creditworthiness.
• If you are new to credit and have no accounts, then opening a secured credit card or a credit-builder loan is a good first step because it establishes a credit record from scratch.
• If you find an error on your credit report, then dispute it immediately with the credit bureau and the creditor because inaccuracies can unfairly lower your score.
• If you use a credit card for a small, recurring expense, then set up an automatic payment for the full balance because this ensures you pay on time and avoid interest charges.
• If you have multiple credit cards with high balances, then focus on paying them down before opening a new card because high utilization negatively impacts your credit score.
• If you are planning a major purchase requiring financing (like a car or home) soon, then avoid opening new credit accounts for at least 6-12 months because recent credit inquiries can temporarily lower your score.

FAQ

How long does it take to see an improvement in credit history length?

The impact of adding age to your credit history is gradual. It depends on how old your existing accounts are and how long new ones have been open. Lenders look at the average age of all your accounts, so it takes time for newer accounts to mature.

Can I become an authorized user on a store credit card?

While technically possible, it’s generally not recommended for improving credit history length. Store cards often have lower credit limits and may not have as long a history as a major credit card. Focus on established, well-managed accounts.

What if the issuer closes my old card due to inactivity?

If an issuer closes an account due to inactivity, you can’t prevent it. However, the positive payment history up to that point will still remain on your credit report. The key is to try and keep accounts active before they reach that point.

Does using a credit card for small purchases and paying it off immediately hurt my score?

No, it actually helps. Using a credit card responsibly, even for small amounts, and paying it off in full by the due date demonstrates good credit management. It also keeps the account active.

How does the length of my credit history affect my credit score?

The length of your credit history is a significant factor in your credit score. A longer history, especially with positive payment behavior, indicates to lenders that you have experience managing credit responsibly over time, which generally leads to a higher score.

Should I pay off my old credit card completely if I’m not using it?

If the card has no annual fee and a long history, it’s often better to keep a small balance or make a small purchase occasionally to keep it active rather than closing it. Paying it off completely and closing it will reduce your average account age.

Will opening a credit-builder loan help my credit history length?

A credit-builder loan helps establish or rebuild credit by making regular payments on a loan that you don’t receive until it’s paid off. This demonstrates consistent repayment behavior, and the loan’s existence adds to your credit mix and history.

What this page does NOT cover (and where to go next)

• Specific credit scoring models (e.g., FICO, VantageScore) and their exact weighting of factors.
• Next: Research different credit scoring models to understand their nuances.
• The process of disputing errors on credit reports in detail.
• Next: Consult resources from the Consumer Financial Protection Bureau (CFPB) for dispute procedures.
• Strategies for managing overwhelming debt or bankruptcy.
• Next: Seek advice from a non-profit credit counseling agency or a bankruptcy attorney.
• How to apply for specific types of credit products like mortgages or auto loans.
• Next: Explore resources on mortgage lending or auto financing.
• International credit history and its impact on US credit.
• Next: Consult with financial institutions about how foreign credit history might be considered.