What this means is that out of all your credit accounts, you do not have a lot of well-established credit accounts that have a positive payment history. You need to remember that when it comes to credit scoring, the age and positive consistency of your credit accounts is key.
Generally, the longer you’ve had a credit history, the better it is or your score. However, it is far better to have a long history of good credit payments, than it is to have a long history of average credit payments.
Is maturity of credit accounts a big factor that impacts credit score?
The length of your credit history and age of accounts is not a massive factor when it comes to the makeup of your credit score. It is; however, a good way for creditors to see how you have managed your credit in the past and it can be a way for them to determine whether you’re a safe bet to loan money to in the future. It is possible for someone with a fairly new payment history to score better than someone with a mature credit history. At the end of the day, it boils down to how you consistently manage your credit.
What components are used to determine credit history?
- It will look at how long your credit accounts have been opened.
- It will then look at how long your specific types of credit accounts have been opened. For example, you may have had a credit card for 5 years, but a personal loan or only a couple of months.
- A consideration will also be to look at when last your specific credit accounts were used.
How do you build mature credit accounts with a good payment history?
Firstly, Rome wasn’t built in a day and unfortunately it will take time for your credit accounts to mature. In fact, if you are completely new to the credit world, it can take months for a credit score to be generated for you. It’s very important that you start with and maintain a good credit repayment plan, as this will have a big impact on your credit score.
Closing a credit account will also have an impact on your credit score. If you close an account, it will be removed from your credit reports and it won’t be used in the calculation anymore. This will bring down the average age of all your credit accounts. If you do keep all your credit accounts open, you need to make sure that you are paying them on time and that you are keeping your credit utilization below 30%, you can learn more about credit utilization here.
You will see that if you are consistently making payments on your different credit accounts, that your credit will mature like a fine red wine and your credit score will get better and better.