So what’s your number?  Are you a 580? 840? Somewhere in between?  I’m talking about your FICO credit score, the most commonly referenced credit rating by those who loan money or have a need to check on how well you pay your bills.  I used to think that if I paid my bills on time, my credit score should be perfect, but there is a lot more to it than that.  There are a number of factors used in your FICO score.  The one I will discuss here is TIME.

If you hold a credit card for 6 months, and someone else keeps an account open for 6 years, you will have a lower credit score, even if your on-time payment history is about the same.  It can be difficult for young people to establish a credit rating simply because they have no track record.  This is because lenders have a hard time judging your reliability based only on a short time span.  If you stop using any form of credit, your score will also begin to decline.

By the same token, if you have an old account that is not being used, it will hurt your credit score if you close it, because it will lower your average account age.  Both your longest active account and the average age of all your credit accounts matters.  Try not to close your oldest account, unless it is costing you in monthly fees.  If you do have a lot of unused or costly accounts to close or consolidate, try to spread out the closures over time, or expect a ding to your score.

As you can see, checking your credit score is just a snapshot because it can change somewhat each month.  FICO is not the only score in town either.  In fact, there are almost 50 different ratings that lenders can use.

The TIME factor represents 15% of the makeup of your credit score.

In my next article, I will shed some light on payment strategies to boost your FICO rating.  You can follow Paper Tigress Personal Finance Care on Twitter: @PaperTigress1, and Facebook as well.