Credit Repair

Basic Things You Must Know About The Length Of Credit History

The length of credit history is one of the five major factors that determine your credit score. Other four factors include timely payments (35%), debt to credit ratio (30%), types of credit (15%), and the enquiries for new credit (10%). The remaining ten percent of your score depends on the credit history length.

No Credit History

If you have not yet started using credit in the United States of America, you will have no history. Your FICO score will be zero. It usually happens with two types of people – immigrants who have just shifted to the US and the young adults who have not yet started earning and taking financial responsibility. Obviously, the length of credit history increases with time. The irony here is that you will not be able to qualify for low rate loans or credit cards with a zero credit score even though you are not at fault for this. In such cases, you are advised to go slow, with patience. For example, a wise strategy is to start with a secured credit card. You can easily qualify for a low-rate secured credit card; all you will have to do is just to offer a good amount of security deposit. Make sure you do not use 100% of your credit limit. Debt to credit ratio makes up 30% of your FICO score. Financial experts recommend that a person should not use more than 30-40% of the available credit limit. Keep on making timely monthly payments toward the credit card balances. You should see good improvement in your credit score within just a few months.

The length of credit history also depends on how long you have been using various utility services in your name. Even if you do not have a credit card, mortgage, or car loan, if you have been making timely payments toward your utility bills, it will also work positively for the health of your credit report. You will just have to make sure that your utility service providers are reporting the timely payments of the bills to the three major credit bureaus, which are Equifax, Experian, and TransUnion.


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One Response to “Basic Things You Must Know About The Length Of Credit History”

  1. John says:

    Length of credit history is also as important as the timely payments of your credit. The article is very informative and interesting by reading this article. I came to know about the importance of length of credit history. If you are a fresher in this world of plastic money, you should start using credit cards as early as possible. It is very difficult to get a credit card or a low rate loan with a zero credit score but you can start it by applying for a secured credit card. Here you have to deposit some security and you will get a credit card against it. Once you get a credit card, you can make some positive efforts to increase your credit score. Always do the payments of balance in time and never use your credit limit 100 %. You should try to use only 30 – 40 % of your credit limit. If you are using different utility services from a very long period of time, your credit report will get a positive effect of it also, but you must be paying all your bills in a timely manner. The most important thing is that all these aspect will make any difference only when your service providers report this data to the major credit bureaus.

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