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Credit Rules for Singles, Couples, Families and Seniors

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You can't rush perfection, especially when it comes to credit scores. It's a fact of finances that the younger you are, the lower your credit score is likely to be.

No, it's not reverse age discrimination: It's simply because the length of your credit history -- the number of years you've been borrowing and paying back -- counts for roughly 15% of your overall credit score. The other factors are payment history (35%), amounts owned (30%), new credit (10%), and types of credit use (10%).

On average, here's how people stack up over the ages, according to data:

Average Credit Score By Age

Age Score












Of course, at The Motley Fool, we encourage everyone to set stretch goals and aim to be above average, no matter where you fall on the age-credit score spectrum. So I talked with Educational Services President John Ulzheimer about the best and worst credit moves to make at each life stage.

Singles: Get it right the first time
Colleges are littered with lenders who offer easy credit (and a free T-shirt!) between classes. If you pinky-swear to be an adult about the whole thing, go ahead and take the bait. As Ulzheimer points out, "Credit use isn't bad; credit abuse is." If you resisted the mountain of offers -- or if you're divorced, or new to the country -- then your file may lack enough data to be scoreable. If so, apply for a retail credit card, and soon enough, offers for prime Visa and MasterCard accounts will start rolling in.

  • Proceed with caution: Without the luxury of an established credit history to buffer your bad moves, even a few late payments can be catastrophic, Ulzheimer says. Charge too much, apply for too many cards, or make late payments -- remember, punctuality accounts for 35% of the FICO scoring equation from Fair Isaac (NYSE: FIC  ) -- and your score will suffer. Be diligent when student-loan payments come due. Defaulting is not an option. The loan won't be discharged in bankruptcy and will mar your credit report for years, even after you finally pay it off.
  • Opportunities ahead: Good credit conduct is amplified if you have a short track record. Lenders looking to earn early loyalty may even give you better offers than someone with more established credit gets. Play nice now, and you'll recover more quickly from future rough patches.

Couples: Maintain the "you" in your union
Togetherness has its perks in the credit world. However, don't go overboard: Maintain some credit autonomy, even if you share everything else except your toothbrush. Closing accounts that you established in your single days -- or failing to occasionally use those cards -- can result in a stagnant, unscoreable credit file in as little as six months.

  • Proceed with caution: "Chivalry and credit management don't necessarily go well together," Ulzheimer says. Credit-scoring bureaus aren't as forgiving of your partner's money blunders, and those joint-account flubs will show up on both of your credit files.
  • Opportunities ahead: You now have two credit scores from which to choose when shopping for the best rates, as well as the option of joining financial forces to qualify for the love nest of your dreams. On the flip side, if you plan to use both of your incomes to qualify for a bigger loan, be aware that both of your credit scores will factor into the lending decision. So help your honey improve his or her score (or let your honey help you, as the case may be) well before you need to apply for a loan.

Families: don't get buried by debt
Family life can be complicated. Big-ticket items such as mortgages and school tuition can stretch households to the brink. Your credit needs to work in your favor to reduce the stress on your finances and give you access to the best rates.

  • Proceed with caution: The types of credit you use -- revolving credit, installment loans, and so on -- have a 10% impact on your FICO score. But don't rely too heavily on credit as a bridge to a better life. Remember, the amount of new credit you apply for is 10% of your overall score. Avoid those tempting "no money down!" offers for furniture, electronics, and appliances. Entering into transactions with financing companies, says Ulzheimer, can make an OK credit file look iffy. The additional debt also has a long-term effect on your debt-to-available-credit ratio since it remains stagnant until you pay down the balance.
  • Opportunities ahead: Teach your kids good credit manners. The penalty for ignorance is steep: Most blunders linger on a credit report for a punishing seven to 10 years. The fastest-growing segment of bankruptcy filers are those between 18 and 22.

Empty-nesters/seniors: keep your credit healthy
Don't sweat the gray hairs -- in the credit world, you're better looking than ever. You have a long history (that's 15% of your score), fewer debt burdens, and a lifetime of assets. Unfortunately, what makes you attractive to creditors also makes you a bigger target for identity thieves.

  • Proceed with caution: You may not be shopping for a new home, car, or college loan, but that doesn't mean you should stop maintaining and managing your credit. "Remember, car and home insurance companies depend on credit scores to determine your premiums," Ulzheimer says. Older couples should heed the advice above about keeping active credit in their own names. When credit card companies hear of a death, accounts are closed and noted on the deceased's report. The surviving spouse's access is abruptly cut off.
  • Opportunities ahead: Besides bragging rights, you have enough padding in your credit file to weather blips -- such as a new credit inquiry or a sharp increase in your balances -- like a champ. But don't get cocky: Although the hurt of any mistakes will be minimal, remember that more recent behavior carries more weight than yesterday's news does.

More ways to smartly manage your credit:

This article was originally published in May 2007. It has been updated.

Dayana Yochim's credit score may have a few gray hairs starting to show, but she still likes to think it can pass for 29. In dim light. From a moving vehicle. The Fool has an ageless disclosure policy.

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