Length of Credit History – 15% of Your FICO Score

The longer you have credit accounts open, the higher your score will be in this category. 

In general, you need to have a credit account open for at least 6 months in order for it to count on your credit history section.

 

Additionally, having accounts that have been open for more than two years will help boost your score as well.  This category looks at both the time since the account was open as well as the time since the last account activity.

CREDIT TIP:  After you pay off a credit card, do not cancel the card!  Instead, keep your credit card account open, but with a 10% balance, so that it can help your credit score.  Open credit card accounts will contribute to the length of credit history section even if there is only a small balance on the card.  Additionally, by keeping the credit card open, you are increasing your available credit limit and thereby lowering your debt to credit ratio.  Way to go!

New Credit – 10% of Your FICO Score

Every time you apply for a new credit card or new loan, it goes on your credit report and impacts your credit history. 

While this is not to discourage you from opening new accounts, you need to be careful about how many accounts you open at a time.

This category incorporates information about:

• How many credit inquiries you’ve requested for approval of a loan.  These are called “hard pulls” and can hurt your credit score.  (However, “soft pull” that you did not request do not count against you.  Additionally, requesting information about your credit history from www.myfico.com will not count against your score either.)

• How many new accounts you’ve recently opened
• How long it’s been since your new accounts were opened
• What percentage of your accounts are new accounts

If you are in the process of looking for the best rate on an installment loan, the credit score will only count one of the inquiries against you – instead of penalizing you for all of them. 

This rule was designed to allow you to shop around for the best interest rate without ruining your credit score.  In general, any requests for the same type of loan within a 30 day period will be treated as a single request when it comes to your credit score.