How long does it take to build a healthy credit score?

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How long does it take to build a healthy credit score?

By MIKE GOLDSTEIN

Building a great credit score takes a lot of positive qualities. On top of the responsibility, prudence and maturity required to stay on top of your bills and spend within your means, developing a top credit score also takes a good deal of patience. Age of credit history is one of the fundamental factors that can influence your credit score, and it's not something you can get overnight.

While age of credit history is certainly important, there is honestly no set of amount of time required to have a good score. Each person's experience will be different. In this article, we'll explore how this factor may be calculated and how long it takes to build a healthy credit score.

What is age of credit history?

Age of credit history reflects the length of your experience with the credit system. Conceptually, this aspect of your credit score is meant to speak to how experienced you are with the responsibility that comes with credit cards, loans and other borrowing.

The way the metric is calculated specifically can differ between scoring models. Commonly, many models will judge your age of credit history by calculating the average age of your open accounts. This, notably, is what's shown on Credit Karma. Other models may simply use the age of your oldest account instead. Finally, some models could factor in closed accounts in the average age calculation for as long as they remain on your credit report.

The specifics of how a particular decision could affect your age of credit history depend on which calculation model is being used. Generally, though, it's beneficial to keep your oldest credit accounts open and active. Whether the effects of closing your oldest accounts are immediate or delayed until the account in question finally falls off your report, doing so will usually lead to your age of credit history metric dropping. For models that average age across your accounts, keep in mind that opening a new credit card or loan might drop your average age in the short term, as well.

Why does age of credit history matter?

Lenders use your credit report to get a sense of your track record of borrowing. They want to evaluate the risk that lending to you poses, and may use this information to decide whether to approve you for credit or to adjust their terms accordingly. The longer your credit history, the more they have to judge on, and the more accurate of an assessment they can make.

Age of credit history isn't the only aspect, though. If your lengthy credit history is full of missed payments and derogatory marks, the fact that you've been around for a while probably won't be enough for a great score.

So how long does it take to build a great credit score?

Unfortunately, there's no one answer here. Your credit score depends on many factors, not just age of credit history, so there's not a magic time barrier you have to cross before your score leaps up 100 points or anything like that. Still, we can learn from the data we have about how age of credit tends to relate to credit scores.

Among Credit Karma members, we've noticed a steady rise in credit scores as the average age of open accounts gets longer.* Members with an average age of open accounts between one and two years have an average credit score of 622. Bump that age up to two to five years, and the average score rises to 638. Ages between five and eight years average 661. Finally, average ages over eight years earn a credit score of 675. The trend here is pretty clear.

Put another way, Credit Karma members with scores that top 750 have an average age of open accounts of 7.5 years. While there is no magic number or threshold here, it is fairly clear that a great credit score does usually take some time.

Bottom line

In addition to the other factors that contribute to your credit score, age of credit history is something that's worth keeping in mind. Establishing a healthy age of credit history might even influence certain financial decisions, like whether or not to close a credit card. In the end, it's your score to maintain, so stay educated on the factors that might affect your credit health and make the decisions that are right for you.

*All data cited based on the most recently available credit reports of Credit Karma members as of October 2014.

About the author: Mike Goldstein is Copywriter at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.

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All Comments

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1 Contribution
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Helpful to 137 out of 164 people

I have worked in the credit industry for over 40 years. I have reviewed and approved/denied credit applications from manually "pulling" a credit report to using credit score models. A biased use of average age of OPEN credit accounts vs. all accounts, be it open or closed, is to some degree very foolish. The larger debts that an average consumer has in general, are mortgage and automobile related purchases. So let's think about RE first. One should/needs to manage one's mortgage debt relative to the lending rates environment. If we borrowed at bank A at a relatively high rate and refinance the debt at bank B at a more favorable rate, one would consider you a risker credit individual. This "interesting" situation is easier to see in the case of automobiles. Let's say you lease a new vehicle every 3 years. Each time you open a new lease your old one is considered "closed." And your credit scores gets dinged. Auto purchases are financed and kept open around 3 to 4 years on the average At that time , they either get traded-in or they are paid off.

Yes, I know is very important to have a good credit record. But it is more important in my view to have a more sensible approach to "money" handling. A high credit score for its own sake is not a good gial to have.

A final thought. I recently managed my mortgage debt and reduced the interest rate by over 1%. I have become a riskier individual! LOL. But in my case, it does not matter as my credit score still remains over 800 (upper 700s under the older system.)

Make it a great day!!!

Reply by
rgar102181

2 Contributions
44 People Helped
Helpful to 37 out of 45 people

My credit score was touching 800 until I switched credit cards two months ago. I had my old card since 2004. After I switched to the new card I closed my old credit card account. Transunion lowered my credit score from 790 to 732. This does not seem logical. Equifax only dropped my score from 795 to 777.

1 Contribution
39 People Helped
Helpful to 39 out of 40 people

Never close a card if you don't have too! I have only done it once out of spite knowing it would lower my FICO score. I only did it because I knew I would never do business with them again and couldn't stomach any relation to them ever.. (BofA)

When you end a credit line by choice it works against your score in most cases.

Reply by
lxp123

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34 People Helped
Helpful to 34 out of 39 people

I have a question....I have been banking with the same financial institution for 10 years, I am very stable.  My mortgage has changed hands several times as my mortgage gets sold to other financial institutions which is out of my control thereby shortening by credit history.  My credit card company revamped it s credit cards and issued a replacement card that started by 10 year credit history over again.  How does one protect and grow a lengthy credit history when you have no control over it?  

Reply by
LWJR

1 Contribution
0 People Helped

Reading this was very helpful. Can i ask a bit of advice. recently Ive paid off all my outstanding debts. I am working to build my credit. The only thing remaining is my car payment as a "debt" I have the money at this time to pay it off. But its in good standing never any late payments, and I havent secured a credit card yet (waiting for my score to build) Would it be best to continue making payments eventhough it would cost me more than just paying the loan off now?

2 Contributions
71 People Helped

Helpful to 71 out of 80 people

As far as "length of time of credit"??? Two of my credit cards companies have closed the accounts and reopened with other banks. I've had credit for 10 years, but due to the credit cards (Best Buy and JJill) playing "musical banks/chairs", it has shortened the length of time that I have had this accounts. So, I keep my balances low, have 100% "paid on time" and my score is only 710. The only "Poor" act is the length of credit history, which isn't true. So, I'm at 4 yrs 7 months, when in reality it is 10 yrs. Now I have to wait for years for that to change with the passage of time??? Not fair!

Reply by
NilesBishop

1 Contribution
48 People Helped
Helpful to 48 out of 50 people

I have found that "Credit Utilization" will effect the score far more then lengh of history.  Mine is only 1 year 8 months but my score is 766.  My credit utilization is 6%.  My understanding is anything above 10% dings your score.

Reply by
EmeryBoard

3 Contributions
134 People Helped
Helpful to 21 out of 23 people

I total agree, there should be some other system in place to ensure consumers such as yourself get the credit they deserve. When you have actually had an  account for 10 years but only show 3 bcz of a merger sucks. There should be something in place to help with this , as well as when applying for credit to get a good rate we get dinged for " hard inquiry" .   I am in the same boat, I have had credit for over 10 years but I only get credit for having an open account for 11 months. I had credit cards/auto loans/mortage but closed them all due to divorce. When that happened all though my accounts were in good standing they were closed which ceased that revolving credit per say.  So now its as though Im starting fresh from square one. I feel your pain. 

Top Contributor
17 Contributions
74 People Helped

Helpful to 62 out of 71 people

My oldest open credit card is from 1993.  However,  it is NOT mentioned in my credit karma report but IS mentioned in my Full Credit Report. In the Credit report, it is listed as being 11 years old.    Credit Karma is a good tool but the best way to get an accurate reading is to wait once a year and look at your government report.  

Top Contributor

Reply by
CKCharmaine

512 Contributions
1067 People Helped
Helpful to 17 out of 29 people

Hey CherylAbbott, this sounds like something a support specialist would be happy to investigate for you. Please reach out to them at https://www.creditkarma.com/about/contact.

6 Contributions
157 People Helped
Helpful to 99 out of 131 people

I diagree with the free credit report as being our most accurate reading. This is why.

I checked my credit through the annual free credit report since I am trying to rebuild my credit to buy a home. I am eligible for a VA loan and they are more lenient than conventional lenders. When my scores from the FREE credit report annually showed 750/660/630, I went to a credit untion to be preapproved. When they pulled my credit, the first scor of 750 was almost 200 points LOWER than the freebie. The other two were also at least 100 points lower. SO, I did not qualify, because those freebie scores annually DO NOT report the correct scores to us. In researching this, I learned that this was indeed true, that no mistake had been make on mine, but that the scores are only "teaching" scores. Now, why this is is beyond me. SO DO NOT RELY on the annual free ones you spoke of as being accurate. Oh, and BTW, I came home and paid for my credit report online, and the numbers I PULLED UP (not the freebie ones) were almost identical to the numbers the credit union pulled up. This also cost me points on my already low scores. I would never have applied to be approved for a home loan if the scores shown on the free annual report had been the actual score. Like you, I always believed those were our actual scores..NOW, I am also seeing higher scores here on CK, so to find out my true credit scores is baffling me.

Reply by
inwhomhedelights

1 Contribution
3 People Helped
Helpful to 1 out of 1 people

Same thing is happenning to me at Credit Karma , Cheryl. My last mortgage paid in full does not show up only on Credit Karma scoring? Therein stating my length time of credit short. By many years.

2 Contributions
37 People Helped

Helpful to 29 out of 32 people

I see alot of people complaining about "I had this account for 10 years so why does creditkarma show only 4!"

I think what is lost in this article is the very important fact that it's the AVERAGE age of accounts.  The keyword that is lost here is AVERAGE.  The article barely touches it, but in the comments no one can seem to understand it.

Say you opened account a 10 years ago, and you opened account b 8 years ago, then you opened account c 3 years ago....  the AVERAGE age of your accounts is 7!   Total years of your accounts is 21 (10+8+3)  and if you divide that by the number of accounts you have (3) then you get 7 so the AVERAGE age of your accounts is 7 - even though you have an account that is 10 years old, your newer accounts bring down the AVERAGE.  Basic math, folks.  

So yes, closing old accounts will lower this number but opening new accounts lower this number as well which is a point I think that is lost in this article.

As for the fake credit scores available on credit karma, the only place you can get your ACTUAL fico scores (the scores the lenders use) is myfico.com and you have to pay for them.  Anywhere else is most likely a fake (Vantage) score.  Very confusing to consumers.

1 Contribution
29 People Helped

Helpful to 29 out of 34 people

Dumb way of judging credit history because the only way to have long credit history is if you keep the same credit card or same house because I buy new cars every three years I've had more than one house and my first house I bought 20 years ago and is not even figured in.you say I have only 5 years of history when Ive had credit cards for over ten years and 35years Of history and no negative payment history makes no since

2 Contributions
24 People Helped

Helpful to 24 out of 31 people

I have over 16 years of credit history in this house, why does it only say a couple of months?? This score is VERY different from OTHER credit sites! Why?? How do I know what to trust on here?

Reply by
mmwarren22

1 Contribution
3 People Helped
Helpful to 3 out of 5 people

The informatioon on this site is like a rough estimate not 100% accurate.

Reply by
sanah2

2 Contributions
7 People Helped
Helpful to 5 out of 7 people

@mmwaren22...yes I would say a VERY rough estmate. Checked my scores in March 2015 they were 716, checked them today July 2015 when they should have been greatly improved because of several strides I have made and they were 611 - Explain that to me, please....can you?

1 Contribution
15 People Helped

Helpful to 15 out of 18 people

Hi,

Is it possible to add into the Credit Score Simulator some prediction chart? 

It is interesting to see how your possible actions could affect the score, but it is interesting as well to see how your score could grow in the next months/years after your action - based on your statistics of similar accounts with the same starting parameters performed the same action at the beginning - just simple chart with expected high, average and low score month by month.

ps. may be even to draw my (customer's) score over such chart to help him to understand is it fine or it's time to make more attention and to think about CK recomendations how to improve it?

Thank you in advance,

Anatoly

1 Contribution
11 People Helped

Helpful to 11 out of 16 people

I am checking all the different scores I have and to be honest I dont know who to believe in anymore, cause one day I have 774, and in another day I have 638 or 622. So to be honest I dont know who is right or wrong.

Anyway what I dont understand is if a credit card gives you a limit of let say $1000.00 and you use 86 or 90 percent of your credit card that looks bad in your score, so with this said, why even use a credit card when they are managing how much you use or not...This is a credit card that you are using and paying back, so why should it matter if yo use half or all of the limit.

Julie

Top Contributor

Reply by
Atlantic51

11 Contributions
35 People Helped
Helpful to 2 out of 4 people

Enter Your Reply HI Julie, please read credit card utlization and how it affects your score. 

Reply by
jls53

8 Contributions
32 People Helped
Helpful to 7 out of 7 people

Enter Your Reply I believe it is all done to justify charging the consumer the highest interest rates possible. I filed a chapter 7 bankruptcy 8 years ago and recirved credit cards after with 14% interest rate. I have not missed a payment in 8 years and they all want to charge me 22-27% now. Bankruptcy used to drop off after 7 years now it is 10, so they can charge you higher interest rates for 3 more years now. My advice for everyone, pay off credit card debt and only use credit for a car or house. That is what I am doing, I will have no credit card debt by 08/2016 and will use my credit cards each month and pay off the balance each month.  

1 Contribution
11 People Helped

Helpful to 11 out of 18 people

I am 54 and I have a lengthy credit history.  I owned and sold a house.  I have had many credit cards that I paid off.  However I had a bankruptsy about 8 years ago.  Why do they say I have such a short credit history, and such a low credit history score.

6 Contributions
157 People Helped
Helpful to 22 out of 32 people

I can't answer that, but I completely agree the time on the report is too short for the positive credit and much too long for the negative. Being able to sell paperwork over and over so the bad never comes off is wrong when they terminate the information on positive ones very quickly. I was recently turned down for preapproval on a home loan because the scores from the big three on the free annual credit report were not my actual scores, so I went back and looked at my PAID for credit report, which showed my actual scores, and there was no credit history of my car paid for over 5 years that ended only 2-3 years ago. Also, there was a note: "Insufficient car loan history". These people are playing with our credit like russian roulette. It's really a shame the good credit doesn't stay a long time, because a lot of us go through 'things' that can cause us not to pay in our usual manner, not to continue to buy on credit, but these negative things are not permanent. However, our necessary actions in choosing who should get paid on time and who should not because of a job lost, spouse dying, etc., DOES reflect our credit for years and that is because of our creditors selling their papers to another and then that one selliing to another and another and on and on. I have a negative on my history that dates back to 1984. It started out as $2000. and it is now about $14,000 because of all the interest they have added and the different agencies that have had it. I tried to make arrangements with one of them, but they would not. Since they would not accept payments, I could do nothing more than to ignore it. Bottom line here is that it has been 30 years and that one is still there, and the good ones are gone before 7 years.

Reply by
mrwvtxman

3 Contributions
16 People Helped
Helpful to 11 out of 11 people

Because your credit was wiped off with the bankruptsy and starts all over.

1 Contribution
2 People Helped

Helpful to 2 out of 3 people

what i fail to understand is why do we have to have a bunch of open loans to have a good enough score, you are only farther in debt as far as im concerned.

we had to file for bankrupsy almost 7 yrs. ago due to me becoming disabled and losing over half of our yearly income, we were horrified i never miss a payment.

my bills come first then gas and or upkeep of a older car with no payments groceries and our needs come last check to check every week!  we refuse to get into this situation ever again if possible. we have no idea what my medical costs might be for the rest of my life. i think credit should be changed somehow or the way our scores are figured,every situation is different. harp program is also a joke for people like us who are also owe more than there home is worth, im 50 he is 60 and we would not be able to pay off house before we even died! ridiculous! we have also sold everthing of value we own to pay medical bills and i am still paying on some from 2 years ago and we have fairly good insurance! we dont want to ruin our credit farther by foreclosing and maybe having to pay remaining balance.

all i can say is thank goodness we have lived this way our entire 34 yrs together or we would be in big trouble. I know many people who run all there credit to the max as soon as they can file bankrupsy again and again buying things they dont even need there is a BIG diffence between wants and needs. maybe the credit score companies and bankrupsy court should research this a little more. We have a community service that will help you if needed  be but for only so long so that people will try to get on there feet themselves,its a great idea and more people are served that need help this way! anyway bank of america told us only options

are foreclosure or in lui of deed, so we are stuck,just as housing prices are also in my area. we want to stay here but may be forced to give up house because i became disabled. we cant get loans for anything so if our car would break down for good, he would not be able to travel to work. i think that the system needs to give the option of each case to explain there situation with proof of course somehow not sure if that would work but most of us are living check to check and have no extra funds for anything. Its very stressful to live this way, when our pay stays the same year to year but prices on almost everything go up every year not wanted stuff needed stuff like meds,groceries ect... there has got to be a better way!

consider all factors in each individual situation with proof of course from the individual

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