If you want to keep your credit score high, make sure you have more than one seasoned credit line in good standing. These credit lines let potential lenders know you are able to keep accounts current for the long term.
Seasoned Credit Lines Defined
Your credit report details several aspects of the different credit accounts you have. Each reported account will list information such as:
- The date the account was opened
- The monthly payment amount
- The payment history
- The maximum credit line
- The balance owed
A seasoned credit line is a credit account which has been opened for a long period of time. These credit lines will have persistent activity on them, so credit lines which sit unused are not generally considered seasoned even if the accounts are several years old. In other words, seasoned credit is used consistently, paid on time, and has been in use for a few years.
Although car loans and mortgage loans are listed on your credit report, the seasoned line generally refers to revolving credit accounts. This includes credit cards, lines of credit, and any other account types which feature a credit line that the account holder can access continually. Just because car loans and mortgages do not fall into the category of seasoned credit lines, however, does not mean that these accounts are not important to your credit score. Maintaining prompt payments each and every month for every account on your credit report is important for keeping your credit score high. Do not be misled to believe that keeping current on your credit cards is the only thing you need to do to keep your credit report clean. You should pay promptly on each account you have.
Should you keep credit lines open - even if you don't really need them - in order to have seasoned accounts listed on your credit report? The answer depends on your spending personality. If you are consistently responsible with your money and pay off credit card balances quickly, then keeping these accounts may be to your benefit. Use the cards periodically and then pay the balance off at the end of the month. This will keep the accounts active, and will help keep your credit score high.
If, on the other hand, you are tempted by available balances on credit cards then it is probably best for you to simply close the accounts instead of having the money available for a spending spree. Although it is true that seasoned credit will help keep your credit score high, if you max the credit lines out then your credit score will certainly suffer worse than if you had closed the accounts in the first place.
Length of Time
If you are wondering exactly how long it takes for a credit account to become seasoned, the answer is that it simply depends. Some people have credit cards for decades while other people only average a couple of years before they close the account and move on to different cards. Generally, a credit card or line of credit that has been opened for two or three years and has been paid on time for the entire duration of the account can be considered seasoned. But nothing rivals accounts that have been open, active, and current for several years when it comes to a strong credit standing.
You may find that there are other perks to having credit lines open for a long period of time, especially when the time comes to call the creditor. If you want to increase your spending limit or find out about lowering your interest rate, you may discover that the customer service representative is more eager to assist you in your request because they do not want to lose your business. After all, a cardholder who has demonstrated an ability to properly maintain an account for several years is the type of customer who credit card companies want to keep.