Building good credit score cannot happen at the flick of the time. Establishing a pattern of responsible borrowing habits takes time and a lot of patience. All that patience can pay off though, because the age of your credit history, or how long you’ve been using credit, generally accounts for approximately 15 percent of your credit score.

Let’s explore why credit history is important and how it will impact your credit score.

What Is Credit History?

Sometimes, people talk about your credit. What they mean is your credit history. Your credit history describes how you use money:

  • How many credit cards do you have?

  • How many loans do you have?

  • Do you pay your bills on time?

If you have a loan or credit card from a bank, you have a credit history. Companies collect information about your credit cards and loans from the credit bureaus. Companies also collect information about how and when you pay your bills. They put this information in one place which is your credit report.

What does a “good credit” mean?

Some people have good credit. Some people have bad credit. Some people do not have a credit history. Businesses see this in your credit report.  Different things happen based on your credit history:

Good Credit is when you pay your bills on time and do not have too many loans pending.

That means:

  • More loan choices

  • It is easier to get credit cards

  • Pay lower interest rates

  • Payless for loans and credit cards

Bad Credit is when you do not pay your bills on time and owe a lot of money.

That means:

  • Fewer loan choices

  • Harder to get credit cards

  • Higher interest rates

  • More for loans and credit cards

No Credit is when you have never borrowed money from a bank/lender or never had a credit card.

That means:

  • No/minimum bank loan choices

  • Very hard to get credit cards

  • High interest rates.

  • Loans and credit cards are hard to get and cost a lot

All this information is in your credit report.

Why is credit history important?

When making lending decisions, lenders review your credit history to determine how likely you are to repay your loan on time. A longer history shows you have more experience using credit. The longer your credit history, the more accurate lenders can be in determining the level of risk they take on when lending to you.

But the age of your credit history is just one piece of the puzzle. Other factors that influence your credit score include:

  • Payment history

  • How much current unpaid debt you have

  • Your credit utilization ratio

  • Your mix of credit accounts

  • How much new credit you’ve applied for

Your payment history and credit utilization ratio have a greater impact on your credit score than the age of your credit accounts. So, unfortunately, if your credit reports show that you’ve missed payments and maxed out credit cards, long credit history may not be enough to make up for the less-than-ideal information on the reports.

On the other hand, if you have a long history of on-time payments and a low credit utilization ratio, it shows you know how to responsibly manage credit and are a good risk to lenders - meaning you could be more likely to be approved for credit cards and loans.

How long will it take for your credit history to affect your credit scores?

In general, you need to have at least one account open that has been reporting to the credit bureaus for six months to have enough information to generate your credit score. You can continue to build your credit history by paying your bills on time and establishing a mix of credit accounts that includes installment loans (like a student loan or mortgage) and revolving lines of credit like a credit card or home equity lines of credit.

However, there’s no set amount of time required to achieve a certain credit score. Because everyone’s financial situation is unique, the length of time it takes for credit score to increase varies from person to person.

Additional Reading: How Length of Credit History Affects Your Credit Score


Because credit history influences your credit scores, it’s worth considering before closing old accounts or opening new ones. That said, it’s not the most important factor in determining your credit score.

Your payment history and the amount you owe to lenders generally account for more than half of your credit score. If you want to establish or maintain a good credit health, it’s probably best to focus on paying your bills on time and reducing debt.

Continue to do that consistently through the years and eventually you will have built a rich credit history of responsible spending and repayment.