2022 Boise Idaho Real Estate Blog

Credit Scoring -- Length of History is IMPORTANT!

Main Boise Home Loans

This next portion of your credit score I will discuss accounts for 15% of your credit history. Read on!

This area of your credit profile carries high significance to potential creditors and lenders, because it traces your credit history all the way back to the oldest account listed. But...it isn't as simple as it seems.

This portion of your credit score is calculated by taking your oldest credit record on file, and then calculating an average age of your credit accounts. It considers three different factors:

1) How long your accounts have been open.
2) How long you have used certain types of accounts.
3) How long it has been since you last used your accounts.

In order to maximize the 15% of your credit score that is derived from this factor, consider these tips:

Make Sure Your Accounts ARE Reporting

Many of my clients are surprised to see when I pull their credit for a mortgage application that a credit account they use is not reporting. If the account is not reporting, then you're not getting points for it! If this is happening, write or call your creditor and ask that they immediately begin reporting to all three credit bureaus.

Don't Close Old Accounts

Even if you don't use the account, do not close it. I've seen lots of credit reports with old Les Schwab or Sears accounts that haven't been used in years. It is much better to have that history as opposed to cutting it off. However, in cases of divorce or identity theft, by all means...close the accounts.

Be Careful About WHEN You Add New Accounts

Don't add new acocunts when you are ready to apply for a mortgage. Those points you lose can lower your credit score, and add to your interest rate!

Don't Open Lots Of New Accounts At Once

You can kill your average age of accounts by opening too many new accounts at the same time, and therefore lowering your score.

 
Posted by Eric Leigh at 7/2/2009 1:44:00 PM

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