Age does not directly affect your credit score. At least not the way late or missed payments or overuse affect your score. But there is a definite connection. Assuming you’ve handled your finances well, age can be a positive factor in determining your credit score. There’s a saying in the financial world… “the best credit is old credit.”
So let’s say you are 70 years old. You may have had charge accounts of one kind or another for 45 years or so. That’s a long time to prove yourself creditworthy. It’s also long enough that, even if you had some bumps along the way back in the early days, you probably overcame them and improved your habits.
Potential creditors also like to see a variety of types of credit accounts: revolving credit like credit cards, installment contracts like car loans, and long-term credits, like mortgages. By the time you qualify for Social Security, chances are you’ve had all of those, perhaps in multiples.
“Generally the older your length of credit history, the better it is for your FICO score,” said Barry Paperno, consumer operations manager for myFICO.com. Fifteen percent of your total credit score depends on how long you have had credit.
Think Twice Before Closing an Account
Creditcards.com says FICO breaks down "length of credit history" into three pieces:
- How long accounts have been open.
- How long specific account types have been open.
- How long it's been since those accounts were used.
Rather than close accounts that you no longer use, you might just leave them open. Let’s say you’ve had a Sears card for 30 years, and that is your oldest open account. If you handled your account well, that is a gold star on your credit history. Of course, after several years of nonuse, the account may be closed in spite of your wishes. So if it’s been a while, it might behoove you to make a small purchase and pay it off, now and then. If you don’t want to charge something you don’t need, then use a card to fill up the gas tank every so often, just to show activity on your account.
Older Borrowers Versus Younger Borrowers
A credit issuer can’t come right out and say they prefer older borrowers, since age discrimination is illegal. But we all know, it exists. For once, being older works in your favor. Apart from the length of credit history and the variety of types of accounts, there’s more. Credit companies know that younger borrowers are more likely to miss payments or make payments late. In spite of the fact that they are generally more tech savvy, young people are also more likely to be victims of online fraud, which makes them a higher risk to credit issuers.
Creditcards.com says, “In the world of the FICO credit score, age and experience trump youth and enthusiasm.” At last – someone recognizes the value of gray hair!
What’s a Perfect Credit Score? A Good Score?
A perfect score is 850, and yes, it is possible to achieve that if you want to work at it. A good score, says Credit Karma, is 720, though different lenders look at different criteria.
SubscriberWise is a risk management solutions company for the communications industry. According to a study they did, the average age of a consumer with a FICO score of 850 is 65 years old (born in 1950). The youngest people with such credit scores are, for the most part, born in 1967. There doesn’t seem to be any real evidence that a perfect credit score is valuable in itself. But some will see it as a worthy goal. “For those obsessed with achieving the perfect FICO score, at least one fact profoundly demonstrated with our data is that an individual must have a long and well-established credit history to have even a remote possibility of reaching an 850," SubscriberWise president David Howe said in a company press release.
Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.