What Is Credit Age and Why Does It Matter?

When it comes to managing your credit, one term that often comes up is “credit age.” If you’re looking to improve your credit score, understanding the significance of credit age can make your journey to a healthy score much more accessible. Take the first steps toward your financial health and keep reading—our team at Legacy Bank is exploring what credit age is, why it matters, and how you can manage it effectively!

What Is Credit Age?

Now that we know credit age plays a crucial role in determining your overall credit score, it’s important to understand what exactly credit age is. Simply put, your credit age is determined by calculating the average age of your open credit accounts. Because of this, younger borrowers will often have lower credit ages, which impacts their overall credit score. Before you close out a credit card you no longer use, consider how dropping the open line of credit will affect your credit age (remember, we’re dealing with averages!).

Let’s See an Example! If you have three credit accounts that are respectively 2, 4, and 6 years old, your Average Age of Accounts (AAoA) would be (2+4+6) / 3 = 4 years.

How Does It Impact Your Credit Score?

Did you know that credit age typically accounts for 15 percent of your overall credit score? While it might not seem as crucial as other factors like payment history or credit utilization, longer credit history can positively influence your score, as it demonstrates to lenders that you have experience managing credit. If you know one thing about credit scores, it’s that the higher the score, the better loan terms and interest rates you’ll qualify for. This means establishing a long track record of responsible credit use will ultimately make you more attractive to lenders, resulting in approved applications and favorable terms.

Tips for Improving Your Credit Age

No matter your credit age, whether you’ve had credit for three months or thirty years, there are simple things you can do to improve your credit age and increase your credit score! If you’re looking to improve your credit age, our team at Legacy Bank recommends:

Keeping Old Accounts Open—One of the simplest ways to improve your credit age is to keep your old accounts open, even if you no longer use them frequently. Closing old accounts can reduce your AAoA and potentially lower your credit score.
Being Cautious with New Accounts—Each time you open a new credit account, it’s important to remember that your AAoA will be impacted. While taking advantage of new credit card offers or loan opportunities might be tempting, consider the impact on your credit age and only open new accounts when necessary.
Practicing Patience—Like most things, building a long credit history takes time. If you’re new to credit, understand that your credit age will naturally improve as you maintain your accounts, and avoid closing them prematurely.