Your credit history accounts for 15% of your total credit score. History does not refer to payment history. History is the evaluation of the timeframe that your accounts have been open and active, as in how many months or years.
Longer Credit History = Higher Credit Score
Long Credit History Paid As Agreed=Positive Impact To Credit Score
Why you should never close a credit account ...
Never close a credit account, especially if it has a long payment history. This can negatively impact your credit score because the history aspect of your credit profile will be made shorter.
Authorized User Accounts
A fairly well known "trick" to raise a credit score is to become an authorized user on an existing account. Some laugh at me when I say this in my credit seminars, because their first thought is, "Why would I give someone with bad credit or no credit my credit card?" Well the fact is you don't give them your credit card. You add them as an authorized user, and when the card comes in the mail, it comes to the account holder. Adding someone as an authorized user benefits them a few ways;
It gives the authorized user "instant history" as spoken about above
It gives the authorized user higher credit limits on their credit profile (see Credit Scoring - Balances)
It gives them great payment history.
The above three benefits are assuming the authorized user is added to an account with a long history, a high credit limit, and the account is paid on time. Adding someone to a "bad" account wouldn't make sense.
Be sure to catch all the credit scoring articles in this series. Keep in mind, credit reports can be complex and confusing. Please contact me if you have specific questions. While I applaud the effort people make to maximize their credit score, we must be certain we are taking the right steps and don't end up creating more harm than good. ~ Steve Kappre
Credit Scoring – History (4 of 6)