How Credit Works

What Is Credit History?

Your credit history is a record of your debts, like loans or credit cards, payments on debts, and requests for credit.

Before approving a loan, lenders want to ensure a borrower is responsible. A responsible borrower is one who has taken a loan or line of credit and repaid it as agreed.

When looking at your FICO score, the length of your credit history accounts for 15% of your total score.

This means people with a longer credit history generally have a higher score than those with shorter histories. A longer, more extensive history provides a clearer picture of the borrower’s risk and allows the lender to make a more accurate risk assessment.

Learn more about how credit scores are calculated.

Having a longer credit history can also help to offset possible past credit mishaps. These mistakes don’t weigh as heavily if your past history is filled with on-time payments and fulfilled obligations.

Closing old accounts could affect your credit score

Since the length of your credit history is a major factor in your credit score, think carefully before closing an old credit account.

Closing old accounts can shorten the average length of your credit history and may negatively impact your credit score.

Learn more about how closing a credit account could impact your credit score.

Bad or no credit history

Even if you have a poor credit history, time passing can help. Late payments, closed accounts, and even bankruptcy typically disappear from your credit history within seven years, some even sooner.

However, if you only allow old, "bad" stuff to age off your credit report without adding new, positive credit history, you could find yourself with a thin file – A.K.A. "insufficient credit history."

Learn about insufficient credit history here.

If you have negative marks in your credit history, start focusing on build your credit so you can begin to establish a good credit history moving forward.

Learn ways to build your credit here.