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Day 7 Veterans and Credit Age: The Power of Long-standing Credit Relationships
Veterans and Credit Age: The Power of Long-standing Credit Relationships
Hello and welcome back on Day 7 of our veteran-centric series dedicated to unraveling the complexities of credit. As we journey further, today’s spotlight turns to a critical but often overlooked aspect of credit: credit age. For veterans finding their financial footing in civilian life, comprehending the role of credit age can be instrumental in their fiscal endeavors.
Defining Credit Age: Beyond Just Numbers
Credit age, or credit history length, refers to the duration your credit accounts have been active. This encompasses:
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Age of Your Oldest Account: The time since your oldest credit account was opened.
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Age of Your Newest Account: The time since your most recent credit account was opened.
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Average Age of All Your Accounts: A mean average of the age of all your credit accounts.
Why Credit Age Matters for Veterans
Accounting for about 15% of your FICO credit score, credit age is a significant indicator for lenders. It offers insights into:
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Reliability: A longer credit history provides lenders a more extended window to evaluate your financial behaviors.
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Stability: It signals that you have experience managing credit over a period and are likely to continue handling it responsibly.
For veterans, especially those who might have had limited opportunities to build credit during active service, understanding the impact of credit age becomes even more pivotal.
Building and Maintaining a Healthy Credit Age: Tips for Veterans
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Hold Onto Older Accounts: Even if you no longer use an old credit card, consider keeping it open. Closing it could reduce your credit age average.
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Open New Credit Strategically: While diversifying credit is essential, frequently opening new accounts can lower the average age of your credit. Be intentional and strategic about when and why you open new accounts.
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Become an Authorized User: If a trusted family member or friend has a long-standing and well-managed credit account, consider asking if you can be added as an authorized user. This can bolster your credit age, especially if you’re just starting out.
The Double-Edged Sword: Potential Pitfalls
While it’s tempting to rush to amplify your credit age, there are pitfalls veterans should be wary of:
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Avoiding New Credit Entirely: While it’s crucial not to open too many accounts hastily, shunning new credit entirely can hinder your financial flexibility and growth. Balance is key.
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Falling for Dormancy: Just keeping an old card won’t suffice. Occasionally use and pay off older accounts to keep them active and ensure they positively impact your credit profile.
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Authorized User Risks: While being an authorized user can be beneficial, ensure the primary account holder manages the account responsibly. Any negative behavior will reflect on your credit report too.
Looking Beyond the Numbers: The Emotional Quotient
Credit age isn’t just about cold, hard numbers. For many veterans, these accounts can represent stages of life, milestones, or even memories. An old credit card might be reminiscent of times before deployment or significant life events. Recognizing this emotional connection can offer a more holistic approach to managing credit.
Concluding Day 7: The Legacy of Long-Standing Credit
Much like the legacy of service that veterans leave behind, a strong credit age is a testament to financial diligence and stability. It’s a reflection not just of time but of sustained responsibility and growth.
As we close today’s exploration into credit age, we reaffirm our dedication: to guide, support, and empower our nation’s veterans in their financial journeys.
Stay tuned for tomorrow’s discussion as we continue to bridge the gaps in credit knowledge, ensuring every veteran has the tools to succeed in their financial aspirations.
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2 Replies
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Jimmy. Tons of consumers who have late payments in the past 12 months. Never seen so many people with recent late payments my man.
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There are many aspects to credit assistance, and today, we focus on an aspect that is often overlooked- the credit age.
Understanding credit age: It is not just a digit
Credit age or credit history length aims to tell how long ago specific credit accounts began to operate. This information is crucial to understanding one’s credit score and finances.
Reasons why credit age matters
FICO score calculation: Approximately 15% of one’s FICO credit score is based on how long credit has been held. A long time of holding credit would often suggest better credit management.
Lender Trust: With a longer credit history, one is considered a reliable borrower. Thus, the chances of being offered loans with desirable interest rates increase.
Important Parts of Credit Age
Average Age of Accounts: This is the average time people are assessed to have been holding their respective accounts. Hence, the more time they have held accounts, the more mature they are.
Oldest Account: This refers to the most active and oldest age of a credit. It would be beneficial to leave dormant accounts open, as it will help improve the credit age.
Newest Account: The age of your youngest credit account. New accounts contribute to lowering the average age of the applicant’s credit accounts; as such, do not apply for new accounts frequently.
Tips for Veterans to Increase Credit Age
Particular Accounts Should Never be Closed: Do not carelessly close old accounts you do not use. These accounts add to your loan age.
New Accounts Only When Necessary: Do not open new lines of credit unless necessary to maintain your average across all accounts.
Credit Report Has to be Checked: Check your credit report occasionally, especially since all these accounts do report.
Practical Example
For instance, you get issued three credit cards:
Card 1: Issued 10 years prior
Card 2: Issued 5 years ago
Card 3: Issued 1 year ago.
In this instance, The Minimum Average amount you can borrow is calculated as follows: Average = (10+5+1)/3 = 5.33.
The “Fillorm” Policy and its Implications for the Credit Age
The correlation between a veteran’s or any American’s life and the age of credit can be better described by the amount of time spent serving as a veteran. It is assumed that during the many years of financing various assets, the number of opportunities available will be multiplied. However, this does not include the extremely advantageous relationship with credit, in all its forms, with credit history.
If you have any questions or need further information regarding how you could take advantage of your credit age, don’t hesitate to contact me. Together, let’s continue securing a solid financial future!