Can age lower my credit score?

Filed in Credit Score, Personal Finance by on March 5, 2014 0 Comments

Some of the key components of the credit score are based upon on length of credit, how currently you pay your bills, how much of your credit card credit limits you use, inquiries, and other minor measurements.  Age is not really a factor in your credit score, but it’s never that easy.

Length of credit

An older age can help your credit score because of the “length of credit history” category, which represents 15 percent of the points in your score. If you have older credit reports because you just happen to be older than, say, someone on their 20s, then you’re earning more points in that category. As you age, you’re likely to have built up a credit history which gives the lender a fuller view of your financial health. The creditor will essentially know you better. However, a recent immigrant to Canada regardless of age will likely have no credit history. So your personal age is not likely a factor. What is more important is the age of your credit history.

Types of credit used

More experienced credit users may also have a more significant variety of “types of credit used” which represents 10 percent of your score points. This equates to having a combination of credit cards, retail cards, mortgage loan, and vehicles loans. Someone who is older would have more of a chance to have a combination of these items than someone that is just starting out.

On the other hand, young people who have had credit for at least two years can still have high credit scores.

Age does not directly equate to a high credit score. An older person usually has had credit for a longer period of time compared to someone new to the credit environment. But, that does not automatically guarantee that they’ll  have good credit.  An older person can have problems paying bills and owing too much, just as anyone else. Any age can have a good credit score by paying your bills on time, in full and keeping your balances low.

Point being, don’t get discouraged simply because you don’t have a longer experience using credit. It’s only 15% of your score points, which means it’s a minor category. Focus on paying bills on time and staying out of debt and then the age of your credit report becomes immaterial.

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About the Author ()

Pat Drummond is the author of Credit Reports Canada and considered by many to be one of the leading experts on productivity and simplicity in relation to financial planning. He started this online credit score & reporting site to chronicle and share what he’s learned in over 20 years of counseling families and individuals on debt management, obtaining loans and improving credit scores.

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