Having good credit opens the door to a host of financially beneficial opportunities. If your credit score is excellent, you're likely to have an easier time not only getting approved for loans, but snagging the most favorable rates out there.

Of course, a strong FICO score won't magically show up on your record overnight. It takes time to build a good credit score, and the older you are, the more opportunity you have to establish a solid payment history. Furthermore, since length of credit history is a key factor that goes into determining your score, it stands to reason that the older you get, the more your score is likely to climb. But while credit score has the potential to improve with age, it doesn't always work out that way.

A pair of hands hold a tablet showing a credit score of 811. Behind the tablet on the same tabletop are a computer keyboard and a cup with a drink in it.

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How your age might affect your credit

To understand how age could affect your credit score, you'll need to understand how credit scores are calculated. There are five components that go into establishing a credit score, each of which carries a certain amount of weight in the formulas credit bureaus use:

  • Payment history (35%), which represents your likelihood of paying your bills on time.
  • Credit utilization ratio (30%), which is how much of your available credit you're using at once.
  • Length of credit history (15%), which is the amount of time you've held your credit accounts.
  • New credit accounts (10%), which speaks to the number of new accounts you open simultaneously (or within a short period of time).
  • Credit mix (10%), which represents the different types of credit accounts you have open (such as a mortgage versus credit cards).

In terms of those categories, the one your age can really help with is length of credit history. Simply put, in this category alone, people in their 40s have a clear advantage over borrowers in their 20s. That's because most people can't open their own credit cards without an income, which often doesn't happen until age 21 or 22. So if you're looking at two people who opened credit cards at 22, and one is 28 while the other is 48, the 48-year-old has the natural edge.

That said, notice how length of credit history doesn't carry all that much weight in terms of the categories above. The two most influential categories -- payment history and credit utilization ratio -- don't favor older borrowers over younger ones, so if you mess one of those up, your score might easily go down with age.

According to ValuePenguin, 40- and 50-somethings have higher outstanding credit card balances than any other age group, including those in their 20s and 30s. But owing too much could impact credit utilization. That's because in order to help your credit score, that ratio needs to be at or below 30%. Exceed that threshold, and your score could take a dive.

So let's say we're looking at a 30-year-old with a $10,000 line of credit and $2,000 in outstanding debt, and a 40-year-old with that same line of credit and $6,000 in outstanding debt. In this scenario, the 40-year-old will have an unfavorable credit utilization ratio, and age has absolutely nothing to do with it.

Additionally, being late on your payments is a function of irresponsibility, not age, so you might easily have a 50-year-old who constantly fails to pay his bills and a 25-year-old who makes every single payment on time. In this case, the 25-year-old will probably have the better score.

Though age can play a slight role in determining your credit score, it's your actions that ultimately dictate how high or low that number is going to be. Use your cards wisely, be on time with your bills, and with any luck, you'll end up with a respectable score -- regardless of how old you are.

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