Understand credit-history length and its impact on your score

Credit history length refers to the duration of time you have been using credit. It is calculated based on the age of your oldest credit account, the average age of all your accounts, and the age of your newest account.

This factor helps lenders assess your creditworthiness by showing how long you have been managing credit. A longer credit history demonstrates financial responsibility and experience, which can positively impact your credit score.

A longer credit history is an indicator of stability and financial discipline. Here is why it helps boost your CIBIL score:

• Builds trust with lenders: A long credit history shows that you have experience managing credit over time, which builds trust with financial institutions.
• Demonstrates consistent behaviour: It reflects your ability to make timely payments and manage credit responsibly.
• Improves credit score: Credit history length contributes significantly to your overall CIBIL score, making it easier to qualify for loans and credit cards.
• Access to better terms: Borrowers with a longer credit history often receive lower interest rates and higher credit limits.

By maintaining a long and positive credit history, you can enhance your financial reputation and enjoy better borrowing opportunities.

Key factors in credit history calculation

Credit history length is determined by several factors. Here is a breakdown:

Ways to grow your credit history length

Improving the length of your credit history is a gradual process, but there are several strategies you can employ to achieve this:

• Keep old accounts open: Do not close your oldest credit card accounts, even if you are not actively using them. Keeping them open maintains your credit history length.
• Use credit responsibly: Make timely payments on all your credit accounts to ensure a positive credit history.
• Limit new credit applications: Applying for too many new credit accounts in a short period can reduce your average account age.
• Authorised user strategy: If you are new to credit, consider becoming an authorised user on a family member’s or friend’s credit card to benefit from their established credit history.
• Monitor your credit report: Regularly check your credit report to ensure accuracy and identify any discrepancies that could impact your score.

Avoid these common pitfalls that can negatively affect your credit history length:

• Closing old accounts: This reduces the average age of your accounts, which can lower your credit score.
• Frequently opening new accounts: Each new account decreases your average account age.
• Missing payments: Late payments can harm your credit score and overshadow a long credit history.
• Not using credit at all: Inactivity on your accounts can limit your ability to build a strong credit history.

Credit history check methods

It is essential to monitor your credit history regularly to ensure its accuracy and track your progress. Here are a few ways to check your credit history:

• Through the Bajaj Finserv Service Portal:
  • Visit the Bajaj Finserv website.
  • Login using your registered mobile number.
  • Navigate to the credit score section to view your credit history and score.
• Credit bureaus: Access your credit report directly from major credit bureaus like CIBIL, Experian, or Equifax.
• Third-party apps: Use trusted financial apps that provide credit report insights and updates.

Monitoring your credit history ensures that any errors or discrepancies are promptly addressed, helping you maintain a healthy credit score.