Article by Andrew Brown - 23rd December 2019

How Does My ‘Credit Age’ Affect My Credit Score?

Credit age is a difficult concept to define and can be tricky to get your head around. This isn’t about what year you were born – it’s more a reflection of how long and to what extent you’ve been using credit and is an important consideration when looking at your Credit Score - especially if you’re looking to improve it.

A person with what could be described as a ‘young’ or ‘immature’ credit age is relatively new to managing credit facilities and may have only one or two recently opened accounts on their report, without much repayment history.

In contrast, someone with a ‘more mature’ credit age will have more extensive, proven and predictable Credit History. Having more accounts, with longer history of repayments, is what gives you an older, more settled credit age.

How does my actual age affect my Credit Score?

Your actual age doesn’t directly affect your credit age or your Credit Report. It will though be collected as part of any application for credit that you make and will be taken into account in terms of affordability and your ability to repay any borrowing.

‘Directly’ is an important point here. This is because your age is generally closely tied to the way you use and manage your finances and credit facilities. And this explains why there often is a relationship between your age and your Credit Rating.

Will my Credit Score increase as I get older?

You may read articles or resources which say your Credit Score increases as you get older. Whilst the trend is generally true, it’s not because you’re getting older.

Again, the key point is that Credit Scores generally increase as people become more financially stable as they get older. You’re more likely to have a stronger financial base from which to manage credit facilities – for example a higher income – and are statistically more likely to be financially responsible.

The credit life cycle

People often don’t start fully utilising credit facilities until their mid-twenties or early thirties, when they start to fund larger purchases through credit cards or look to buy their first property. It’s around this time that your Credit History becomes a more important aspect in achieving major financial milestones.

It’s commonplace for your use of credit to increase with age, and because credit account information typically remains on your Credit Report for a period of six years, a much more comprehensive Credit History will soon be built up. There’s every chance that additional mortgages, car finance, loans and other forms of credit will also start to become commonplace.

How does this affect lenders?

Lenders are well aware that credit age is one of the most predictive ‘characteristics’ of bad debt. And although up to this point, we’ve been generalising about the relationship, it’s not always quite that simple.

It’s natural and inevitable that the level of detail in your Credit Report and overall creditworthiness will fluctuate throughout different periods of your life. There are some tips you can follow to maximise your creditworthiness in the long term, because it’s not just the breadth and depth of your Credit Report that determines your creditworthiness.

While we wouldn’t recommend taking out a credit facility just for the sake of it, there is merit in building your Credit History early. This could be in the form of a credit card that you use for small purchases each month and then pay off in full. Used in the correct way, it doesn’t matter if this card has a higher than average APR and will set you on the way to being able to access other, more beneficial cards such as those offering cashback or other incentives.

Shying away from credit right up to the point when you’re ready to apply for a mortgage won’t do you any good – you’ll be asking a lender to make a massive decision with very little evidence to go on. Instead, by planning ahead and building a robust and mature credit profile, you should be better placed to get a decision fall in your favour.

It’s also good practice to build your Credit Report with a variety of account types. The average amount of accounts in the UK is 7 or 8. Having accounts ranging from mobile phone bills, gas and electric bills, credit cards, bank accounts, car finance and a mortgage shows that you understand appropriate credit usage and can manage multiple accounts well, without going over the top.

It’s important to continue those habits throughout your life, as the positive and negative effects of repayments are amplified when it comes to more ‘serious’ forms of credit. This adds further emphasis to the importance of your credit age and having a long track record of positive credit repayments.

To summarise, whilst the level of detail within your Credit Report should naturally grow (and ebb and flow) as you get older, there are steps you can take to start nurturing it earlier. It’s also vitally important that you stay aware of what’s being reported about you, and what it means.

See your credit age using your Credit Report

The best way to get the full picture about what’s held on your Credit Report and what it all means is through checkmyfile.

We offer the only Multi Agency Credit Report in the UK, showing your data from all three Credit Reference Agencies together in the same easy-to-understand format.

You can try it free for 30 days, then it’s then £14.99 a month which you can cancel without quibble at any time online, or via phone or email.

The UK's First Provider Of Online Credit Reports

Launched 25 Years, 35 Million Credit Scores & 8 Million Credit Reports Ago

The UK's First Provider Of Online Credit Reports

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