If you’ve reviewed your credit reports recently you’ve no doubt seen many dates — many, many dates. Some are more important than others. And some are absolutely critical. A Credit.com reader asks:
What’s the difference between Date Opened, Date Reported, Date of Last Payment, etc.?
There are two reasons why dates on your credit reports are so important. The first is that they may directly affect how long information remains on your credit reports. The second is that they may relate directly to how that information affects your credit scores. We’ve explained how long information can be reported here; in this article we will explore how these dates can affect your credit scores, and your FICO scores in particular.
Date Opened/Open Date
There are a couple of ways that the date an account was opened can impact your credit scores. On the positive side, an account opened a long time ago can help the “age of credit history” factor in your credit reports and scores — which accounts for about 15% of your score. “It is used in all of the length of credit history calculations,” says Barry Paperno, credit expert at SpeakingOfCredit.com, formerly with FICO and Experian.
Here he is talking about the fact that credit scoring models favor well-established credit histories. You get “credit,” so to speak, for having accounts that have been open for a long time. Conversely, you may score lower if your credit history is short or if you have a significant number of accounts that were opened recently. (You can get a free credit report summary from Credit.com that will show you how well you are doing for the main score factors, including age of credit.)
Worth noting here is the fact that even if an account has been closed, if the date opened was many years ago, that account history can help your credit scores. The fact that you closed it does not mean the account is ignored for purposes of evaluating the age of your credit history. Also worth noting: In most cases, a replacement credit card issued after you are a fraud victim or report your card lost or stolen typically does not count as a new account.
Date of Last Activity
This terminology here varies among the credit reporting agencies, but regardless of how it’s described — as date of last activity, status date or date paid/closed — this date can be very important when it come to negative account information such as a credit card that was charged off, an auto loan that led to a repossession, or a mortgage that ended up in foreclosure.
“That (date) will determine when an account took on a particular status,” says Paperno. And timing is important, because more recent negative information typically has a greater impact on the credit score. Conversely, as that item gets older, its impact on the credit score can lessen over time.
On the other hand, it’s worth noting that paying an account like this shouldn’t change that date. “It doesn’t lower your score because the date doesn’t change. It’s already at a point where it can’t go any further,” Paperno notes.
Similarly, paying a collection account does not hurt your credit scores, according to FICO, which says that “as far as the FICO Score is concerned, the algorithm dates collections from when the debt was assigned to the collection agency.”
Date Reported/ Reported Date
“The reported date has everything to do with whether financial information — specifically dollar amounts — are going to be included in the (score) calculation,” Paperno says. “The reported date may also determine whether you are even going to get a score.”
If there is an unpaid balance, for example, the reported date could determine whether that balance will be reported in score calculations. In the case of an older credit card that was charged off, for example, the balance may be ignored if the reported date is older than a certain number of months.
In addition, a credit scoring model may require that an account be reported “within xx number of months or it is excluded from the calculations, as older information tends to be less accurate than when it’s been reported more recently” he says. “That’s why a credit card that you stopped using many months ago might not be included in the calculation.” On a credit card, the reported date tells the score whether to include that balance and credit limit in the “debt usage” or “utilization” calculation, which compares credit limits on revolving accounts to balances.
Date of Last Payment
You don’t have to worry about this one as much as the others. The date of last payment in and of itself is not something the score considers. Paperno says it isn’t likely to trigger anything specific either with regard to how long the item can be reported or how it impacts your scores.
Inquiry Date/Date of Request
Dates that someone reviewed your credit information may be important, depending on the type of inquiry. Inquiries fall into two categories: those that affect your credit scores (often called “hard” inquiries in industry lingo) and those that don’t (“soft inquiries”). All are reported for 24 months. And since soft inquiries don’t impact your scores, they aren’t important on that front. But for hard inquiries, the date of inquiry is important because most credit scoring models will ignore those that are more than 12 months old.
And in case you’re wondering, hard inquiries in the past 12 months generally have the same impact regardless of whether they are one month old or 11 months old.
What Does This All Mean?
You may have noticed that this discussion feels short on specifics. For example, it doesn’t say that an account with a reported date of more than 36 months ago will be bypassed by some of the score calculations. And there’s a reason for this lack of specificity: credit score models vary. They all have their own rules and nuances, so generalizing isn’t particularly helpful.
What is true, however, is that the dates on your credit reports are key to an accurate report and accurate credit score. Review your credit report carefully — you can get free annual credit reports at AnnualCreditReport.com. If you are having trouble understanding it, this guide to understanding credit reports can help.If you believe a date listed is wrong, don’t hesitate to contact the credit reporting agency or the company furnishing the information for clarification, and to dispute it if necessary.
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