Written by Janet Dedrick on May 14, 2012 in Credit  |   No comments

Age may be just a number, but how does your age translate when it comes to your credit score? Here’s some good news: Age isn’t directly a part of credit score models. However, the life cycle of some accounts can be a factor—the calculation of your credit score may rely on how long you’ve held certain accounts and how long you’ve had credit open.

Here’s a refresher on a credit score’s components:

1. Payment history. Do you make your payments on time or are you late? If you’re late, how late are those payments? Are you paying in full or only making minimum payments? The answers to these questions will be reflected in your credit score.
2. Amounts owed and available credit balances. Creditors look at how much installment and revolving debt you owe. They also want to know what percentage of your available credit balance you are using.
3. Length of credit history. How long have your credit accounts been open? Which accounts have been closed and why? These answers will also be factored into your credit score.
4. New credit accounts. Opening several new accounts can affect the length of your credit history and your available balances, and doing so may negatively impact your credit score.
5. Types of credit. Creditors like to see a variety of types of credit, including installment loans (such as auto loans), revolving loans (such as a mortgage or home equity loan), and open credit accounts (such as credit cards).

The credit scores of older consumers vs. younger consumers

As you keep these components in mind, it will become apparent that older people are more likely to have a longer credit history upon which to build a score. If you’re younger, it doesn’t mean you will have a low score, but you might have less information on which to base your score.

• Older consumers, especially retirees, have an established credit history—the what, how long, and how much of a credit score. These are consumers who may have paid off mortgages and car loans, and they probably are able to handle some credit card debt. Their budget and spending habits may not include a mortgage or car loans.
• Younger consumers are just starting their financial life. They’re taking out their first loans and establishing their first credit accounts. They have a shorter payment history. Younger consumers, as a group, tend to have lower credit scores because they have less information available for calculation. They’re trying to build a credit history, but lower incomes sometimes cap payment abilities. That can translate into late payments and a harder time handling debt.  Younger consumers are also more likely to be victims of fraud. They may not know how to protect against identity theft and how to guard their personal information. These consumer fraud issues can be hard to overcome for someone just entering into the financial world.

The bottom line is that age is not directly calculated into your credit score, but it can play a factor in some of your score’s components. The best thing anyone, young or old, can do for a credit score is to be responsible with taking out credit and to make all payments on time.

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